Fed's New Bill Buying: Not Quantitative Easing, But Liquidity Boost
Update: 2025-12-17
Description
The U.S. Federal Reserves recent announcement of purchasing $40 billion in short-term U.S. Treasury bills has sparked excitement in the crypto community, as its seen as a sign of quantitative easing. However, a financial observer named Conks argues that this operation is not for stimulating the economy or financial markets, but rather to ensure healthy liquidity in money markets. The Feds decision comes after bank reserves fell too low, causing interest rates to jump and threatening financial stability. The Feds bill buying will increase cash in the banking system, improving liquidity and lowering the cost of interbank borrowing. This move aims to prevent potential stress in the financial system and remove uncertainty, which could be seen as a positive for risk assets like Bitcoin.
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