How does the Bank of England put more money into circulation?

If the Bank of England buys gilts and bonds in order to increase money supply and stimulate inflation,
A) who does it buy them from? and
B) how does it get the money into circulation? Do they just give money away?
Ok I think I get it. I was thinking the BoE needed cash. But of course it’s printing money and loans it to banks at the best rates imaginable. So then the banks have that extra cash to loan to others as they see fit. Interesting how they’re more likely just to hold onto the money like a safety blanket!

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5 Responses to “How does the Bank of England put more money into circulation?”

  1. danceswithwolves said:

    they just print some more and hand it out on street corners

    if you’re lucky they may come to a street near you

    you have to be quick though lol

  2. Aurelius said:

    They just print it then buy stuff with it

  3. WILLIAM R said:

    Basically they buy them from pension funds, insurance companies etc who then have cash instead of bonds, they stick the cash in banks who can then lend it to others.

    The BoE just print the money (well most money is just numbers in computers these days, so they just key it I suppose).

    Robert Peston’s blog on http://www.bbc.co.uk explains it well in layman’s terms.

  4. Guillem T said:

    The Bank of England, as Central Bank, buys these gifts and b onds from commercial b anks.The money paid increases the money ciriculation.
    The money gets into circulation v ia commercial banks who sold these gifts and bonds to the B ank of England.

  5. Eddy T said:

    Take the UK government’s Asset Protection Scheme. They are asking banks to subscribe to this scheme. Want banks to sell them their toxic assets in return for a fee. In return they want to take a stake in banks out of the fees. They will turn those assets bad assets into bonds or gilts and asked BoE to print money or Quantative Easing.
    Mr. King of BoE is now having second thoughts.
    Japan’s QE and money printing had failed.
    How can APS succeed. When they government main objective is to have a stake in banks and ask banks to lend to each other.




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