Introduction
Monetary policy is a crucial tool used by central banks to manage the economy and achieve macroeconomic goals like price stability and sustainable growth. Traditionally, monetary policy relies on adjusting interest rates and controlling the money supply. However, in the wake of the global financial crisis of 2008 and the subsequent recession, central banks around the world resorted to unconventional monetary policies (UMP) to stimulate economic activity. These unconventional measures, including quantitative easing (QE) and negative interest rates, were implemented when traditional tools proved ineffective. This essay will critically assess the tools and effectiveness of these unconventional policies.

How Unconventional Monetary Policies Work
Quantitative Easing (QE)
Quantitative easing involves a central bank injecting liquidity into the financial system by purchasing assets like government bonds or other securities. This process expands the central bank's balance sheet and increases the money supply. The intended effects of QE are manifold: it lowers long-term interest rates, making borrowing cheaper for businesses and consumers. Lower interest rates encourage investment and consumption, stimulating economic activity. QE also boosts asset prices, particularly in financial markets, potentially leading to increased wealth effects and consumer spending (Blanchard, 2017).

Negative Interest Rates
Negative interest rates, a more recent innovation, imply that banks holding deposits with the central bank are charged a fee rather than earning interest. This seemingly paradoxical policy aims to encourage banks to lend money rather than hold it, thereby stimulating economic activity. Negative interest rates also work to discourage saving by making it less attractive to hold cash. This encourages spending and investment, ultimately stimulating demand and boosting economic growth (Eggertsson et al., 2019).

Effectiveness of Unconventional Monetary Policies
Arguments in Favor:
UMP have been credited with preventing deflation and financial crises in the aftermath of the global financial crisis. The Bank of England, for example, implemented QE in 2009, which, alongside other policy measures, helped to stabilize the financial system and prevent a deep recession (Bank of England, 2009). Similarly, the European Central Bank (ECB) employed QE during the Eurozone sovereign debt crisis, preventing a collapse of the Eurozone financial system (ECB, 2015). Moreover, negative interest rates, implemented by the Bank of Japan and the ECB, have been argued to stimulate lending and encourage investment, supporting economic growth (Bank of Japan, 2016; ECB, 2014).

Arguments Against:
Despite their apparent success in preventing a global economic collapse, UMP have also faced criticism and are not without limitations. One common concern is that they may lead to diminishing returns and become less effective over time. This is because QE can inflate asset bubbles, creating financial instability and distorting market prices (Bernanke, 2012). The evidence suggests that QE's impact on economic growth and inflation weakens with each successive round of purchases (Taylor, 2012). In addition, negative interest rates can have unintended consequences for savers, including reduced returns on their savings and challenges to financial institutions' profitability (IMF, 2016).
Furthermore, UMP are often criticized for failing to address structural problems in the economy. While they can provide a temporary stimulus, they cannot resolve underlying issues like low productivity growth or insufficient investment in infrastructure (Bordo & White, 2014). The effectiveness of UMP hinges on the specific context in which they are employed and the nature of the economic challenges faced.

Evaluation and Conclusion
Unconventional monetary policies have proven to be valuable tools in the hands of central banks during periods of economic crisis. Their success in preventing deflation and financial collapse is undeniable. However, their effectiveness in promoting sustainable long-term growth remains debatable. UMP are not a panacea for all economic ills, and their limitations, including the risk of asset bubbles, negative consequences for savers, and potential diminishing returns, cannot be ignored.
Ultimately, the efficacy of UMP depends on the specific economic context, the intensity of the crisis, and the accompanying fiscal policies. The long-term consequences remain uncertain and subject to ongoing research. Central banks need to carefully consider the potential costs and benefits of UMP before embarking on such unconventional measures. Complementary policies, including fiscal stimulus and structural reforms, are likely necessary to address underlying economic imbalances and achieve sustainable growth.

References:
Bank of England (2009). 'Quantitative easing.' Accessed [date accessed] from: https://www.bankofengland.co.uk/monetary-policy/quantitative-easing.
Bank of Japan (2016). 'Negative Interest Rate Policy.' Accessed [date accessed] from: https://www.boj.or.jp/en/about/press/2016/ko160129a.htm.
Bernanke, B. S. (2012). 'The Federal Reserve's Response to the Financial Crisis.' In <i>The Financial Crisis and the Policy Response</i> (pp. 11-43). University of Chicago Press.
Blanchard, O. (2017). 'Macroeconomics'. Pearson Education.
Bordo, M. D., & White, E. N. (2014). 'A Retrospective on the Recent Use of Unconventional Monetary Policy.' <i>Journal of Economic Perspectives</i>, <i>28</i>(4), 3-28.
ECB (2014). 'Negative Interest Rates.' Accessed [date accessed] from: https://www.ecb.europa.eu/press/pr/date/2014/html/pr140605.en.html.
ECB (2015). 'The ECB's Asset Purchase Programme.' Accessed [date accessed] from: https://www.ecb.europa.eu/mopo/implement/qe/html/index.en.html.
Eggertsson, G. B., Juillard, M., & Singh, E. (2019). 'A Model of Negative Interest Rate Policy.' <i>Journal of Monetary Economics</i>, <i>104</i>, 1-18.
IMF (2016). 'Negative Interest Rates: Global Experiences and Policy Implications.' Accessed [date accessed] from: https://www.imf.org/en/Publications/WP/Issues/2016/06/14/Negative-Interest-Rates-Global-Experiences-and-Policy-Implications-45135.
Taylor, J. B. (2012). 'The Effectiveness of the Federal Reserve's Response to the Financial Crisis.' <i>Journal of Economic Perspectives</i>, <i>26</i>(4), 3-22.