Passive Quantitative Easing: Bond Supply Effects through a Halt to Debt Issuance


Simon Thinggaard Hetland

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2023-24 | August 1, 2023

This article presents empirical evidence of a supply-induced transmission channel to longterm interest rates caused by a halt to government debt issuance. This 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, we refer to it as passive QE. For evidence, we analyze the response of Danish government bond risk premia to a temporary halt in government debt issuance announced by the Danish National Bank. The data suggest that declines in longterm yields during its enforcement reflected both reduced term premia, consistent with supply-induced portfolio balance effects, and increased safety premia, consistent with safe assets scarcity effects.

Article Citation

Christensen, Jens H. E., and Simon Thinggaard Hetland. 2023. “Passive Quantitative Easing: Bond Supply Effects through a Halt to Debt Issuance,” Federal Reserve Bank of San Francisco Working Paper 2023-24. Available at

About the Author
Jens Christensen
Jens Christensen is a research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Jens Christensen