A country is experiencing a deep recession and its government is unable to raise sufficient funds through traditional bond markets. The central bank proposes two options to finance a large stimulus package:

1. Directly create new physical currency to cover all of the government's new expenses.
2. Purchase large quantities of government debt from commercial banks, which increases the reserves those banks hold and enables the government to borrow from them at very low interest rates.

Evaluate which of these two approaches a modern, developed economy would likely prefer. Justify your reasoning by comparing the potential economic consequences and perceived risks of each method.