What method do central banks typically use during quantitative easing?

During quantitative easing, central banks typically create new electronic money as a means to inject liquidity into the financial system. This process involves the central bank purchasing government securities or other financial assets from banks and financial institutions. By doing so, the central bank increases the reserves of these institutions, making more capital available for lending to businesses and consumers.

Creating new electronic money is a pivotal tool during quantitative easing because it allows central banks to lower interest rates and promote borrowing and investment. This is essential in stimulating economic activity, especially during times of financial distress or economic slowdown. The other options, while related to economic policy, do not align with the specific mechanisms employed in quantitative easing activities.