This article argues that lower government debt issuance is conceptually equivalent to a central bank-operated asset purchase program, commonly known as quantitative easing (QE). However, as it involves neither asset purchases nor associated creation of central bank reserves, it is labeled passive QE. A novel classification scheme of central bank balance sheet policies ranks passive QE as quite stimulative. Supportive evidence from a temporary lowering of government debt issuance in Denmark suggests that declines in long-term yields reflected both reduced term premia, consistent with supply-induced portfolio balance effects, and increased safety premia, consistent with safe assets scarcity effects.
Suggested citation:
Christensen, Jens H. E., and Simon T. Hetland. “Passive Quantitative Easing: Bond Supply Effects through Lower Debt Issuance. 2026.” Federal Reserve Bank of San Francisco Working Paper 2023-24. https://doi.org/10.24148/wp2023-24