While Quantitative Easing focuses on purchasing sovereign bonds to lower long-term interest rates, Credit Easing (CE) targets private sector financial assets to reduce risk premiums and restore liquidity to disrupted credit markets.
Primary Credit Easing Instruments
Central banks purchase private assets to stabilize specific corporate credit channels:
- Commercial Paper Funding Facilities: Direct purchase of short-term corporate debt notes to help large enterprises access working capital during credit freezes.
- Corporate Bond Purchase Programs: Buying investment-grade corporate bonds on secondary markets to lower borrowing costs for non-financial corporations, supporting employment and investment pipelines.
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