What is Quantitative Easing?

It is economists' jargon for what is more colloquially termed "printing money" – increasing the quantity of money. Nowadays that does not literally mean speeding up the printing presses at the Bank of England's works at Debden in Essex; it means an electronic transfer of money between the Bank of England and the commercial banks, and thence, so the idea runs, to companies and households.

The Bank of England uses "open market operations" – financial transactions in the markets. It buys the banks' assets, such as government securities and commercial bonds and maybe even their devalued mortgage-backed securities. Importantly, it does so without funding that purchase by borrowing money itself; in effect the Bank just creates the money and transfers it to the banks.

Good explanation from Sean O'Grady. Read the whole article.