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What is Credit Easing?
Credit easing is a form of monetary policy where a central bank aims to increase liquidity (ease credit conditions) within a specific market sector of the economy through the purchase of financial assets. For example, the U.S. Federal Reserve has employed credit easing policies via the purchase of mortgage-backed securities (MBS) in the past. Credit easing may or may not affect the monetary base, depending on how the purchases are financed (as an example, a central bank might sell government debt to fund the purchase of corporate debt). Criticisms of credit easing include the view that allocating credit to specific sectors of an economy is traditionally fiscal policy, not monetary policy.