Quantitative easing is a monetary policy tool that is used to drive down long-term interest rates and to inject additional liquidity into the banking system. To achieve this, the central bank purchases large volumes of bonds, particularly long-dated sovereign bonds. This tends to push up bond prices and lower the corresponding yields – which in turn influences the general level of interest on the bond market. Central banks particularly engage in quantitative easing when short-term interest rates are already close to zero. The purchase of bonds creates central bank money, increasing the supply (quantity) of money, hence the term quantitative easing (as opposed to monetary policy easing by cutting policy rates).