Quantitative easing 3, or QE3, was initiated more than a year after the end of QE2 in which the Federal Reserve said they would purchase the same type of mortgage-backed securities as in QE1 in addition to treasuries. The difference is that this program would not have a purchasing limit and the spending would remain static at $85 billion per month. QE3 was meant to work together with a policy known as Operation Twist, a program where the Federal Reserve would sell the short-term treasuries they owned and use the money to buy more long-term securities. This was done so that the market would be flooded with shot-term treasuries causing the interest rates on those securities to increase, and when they would buy the long-term securities the long-term interest rates would fall. It was named Operation Twist because of the twist in the yield curve that would occur. .
The European Central Bank (ECB) is the central bank for Europe's currency, the euro. Their main objective is to regulate the purchasing power and price stability of the euro. A difference between the ECB and the Federal Reserve is that the ECB solely focuses on the currency issues whereas the Federal Reserve will focus on issues regarding other economic issues such as unemployment. After the collapse of Lehman Brothers, the ECB also resulted in unconventional monetary policy, in addition to convention policy, to try and revive the struggling economy. The conventional monetary policy used by the ECB is changes in the interest rates, which was immediately implemented following the collapse of Lehman Brothers. Within a period of 7 months, the ECB lowered the rate 325 basis points from 4.25% to an all time low of 1%, this rate was maintained at this level until April 2011. After this, the rate was raised to about 1.5% and as of November 13, 2013, the rate is at 0.25%. .
The first unconventional monetary policy tool was the fixed-rate full-allotment policy (FRFA).
