"We assess recent developments in monetary policy practice following the .nancial crisis drawing on papers from a specially convened conference in March 2010. In particular, we consider why
central banks throughout the world have injected substantial quantitites of liquidity into the .nancial system and seen their balance sheets expand to multiples of GDP. We outline the
theoretical rationale for balance sheet operations: (i) portfolio balance of the non-bank .nancial sector; (ii) an o＄set for the zero bound; (iii) signalling mechanism about medium term
in.ation expectations and (iv) the alleviation of the government.s budget constraint. We brie.y outline the recent experience with QE and draw a distinction between liquidity and macroeconomic
stabilisation operations"--
