On 22 January 2015, the ECB Governing Council announced the launch of an expanded asset purchase programme (APP). The APP broadened the Eurosystem’s purchases to include bonds issued by euro area central governments, agencies and European institutions (i.e. the public sector purchase programme, or PSPP). This expanded programme encompasses the purchase programme for asset-backed securities (ABSPP) and the third covered bond purchase programme (CBPP3), which had already been launched at the end of 2014. On 10 March 2016, the ECB Governing Council took the decision to add a non-financial corporate sector purchase programme (CSPP) to the APP. Through the APP, the Eurosystem aimed to lower long-term interest rates and provide additional liquidity in order to react to the too low inflation rate at that time, thereby safeguarding price stability in the medium term.
Since the start ofAPPasset purchases, net purchase volumes have been adjusted regularly, with the following volumes purchased.
- March2015 to March2016: €60billion per month
- April2016 to March2017: €80billion per month
- April2017 to December2017: €60billion per month
- January2018 to September2018: €30billion per month
- October2018 to December2018: €15billion per month
- January2019 to October2019: no net purchases
- November2019 to March2022: €20billion per month (a temporary €120billion envelope was added from March to December2020)
- April2022: €40billion
- May2022: €30billion
- June2022: €20billion
- July2022 to February 2023: no net asset purchases
- March 2023 to June 2023: no net asset purchases and gradual decline of holdings by €15 billion per month on average
On 15 June 2023, the ECB Governing Council confirmed to discontinue reinvestments under the APP in full.
Every week, the latestAPPfigures are published in the Eurosystem's consolidated weekly financial statement.
Third covered bond purchase programme(CBPP3)
TheECBGoverning Council decided on the operational details of the third covered bond purchase programme (CBPP3) on 2October2014. The objective of theCBPP3is to enhance the transmission of monetary policy by supporting the provision of credit to the economy and, as a result, provide further monetary policy accommodation.
Purchases of euro-denominated covered bonds deemed eligible according to the Eurosystem's collateral framework for monetary policy operations began on 20October2014 and covered both the primary and secondary markets.
Asset-backed securities purchase programme (ABSPP)
TheECB's press release dated 2October2014 also outlined the operational details of the asset-backed securities (ABS) purchase programme. The purchases of simple and transparentABSsissued by the private sector on the primary and secondary markets began on 21November2014. As of March 2023, the ABSPP only conducted purchases in the secondary ABS markets. Purchases under theABSPPare conducted on behalf of the Eurosystem by the Nationale Bank van België/Banque Nationale de Belgique, the Banque de France, the Banca d’Italia, De Nederlandsche Bank, the Banco de España and the Deutsche Bundesbank.
Public sector purchase programme(PSPP)
On 22January2015, theECBunveiled the public sector purchase programme (PSPP), which consists of the purchase of bonds issued by euro area central governments, agencies and European institutions. On 3December2015, theECBGoverning Council decided to extend this to include regional and local government bonds. In its introductory statement to the press conference of 10March2016, theECBGoverning Council announced that it had decided to increase the issuer and issue share limits for the purchases of securities issued by eligible international organisations and multilateral development banks from 33% to 50%.
With regard to hypothetical losses under thePSPP, purchases of securities issued by international and supranational institutions will be subject to loss sharing. TheECBGoverning Council reduced the share of such securities purchased under thePSPPfrom 12% to 10% on 10March2016. These securities are purchased only by national central banks. The remaining asset purchases are made by theNCBsand theECB. TheNCBsessentially focus on public sector bonds issued by their home country. Hypothetical losses stemming from bonds issued by central, regional and local governments as well as agencies are borne by the respective national central bank itself. In line with the reduction in the purchase share of securities issued by European institutions to 10%, theECB’s share of thePSPPpurchases, for which potential losses would have to be shared, was increased from 8% to 10%. This implies that 20% of the asset purchases under thePSPPremain subject to a regime of risk sharing, while 80% of the purchases are excluded from risk sharing.
Purchases began on 9March2015 and only take place in the secondary market.
According to Eurosystem rules, auctions may normally be used alongside bilateral transactions as a supplementary procedure for specific market segments under the public sector purchase programme (PSPP). However, the monthly auctions under thePSPPpursuant to the Deutsche Bundesbank’s Special Terms and Conditions for the purchase of public sector securities by the Deutsche Bundesbank via the Bloomberg Auction System (BAS) have been suspended until further notice.
Corporate sector purchase programme(CSPP)
Also on 10March2016, theECBGoverning Council decided that theAPPwould be extended to include outright purchases of investment-grade euro-denominated bonds issued by non-bank corporations. This corporate sector purchase programme (CSPP) enabled the Eurosystem to buy bonds issued by non-banks established in the euro area. Securities issued by credit institutions and by entities with a parent company which belongs to a banking group are not eligible.
The purchases began on 8June2016 and are normally conducted in both the primary and secondary markets (for public undertakings in the secondary market only, as under thePSPP). Purchases under theCSPPwere conducted on behalf of the Eurosystem by the Nationale Bank van België/Banque Nationale de Belgique, the Banque de France, the Banca d’Italia, the Banco de España, Suomen Pankki – Finlands Bank and the Deutsche Bundesbank.
The eligible maturity bands for bonds that can be purchased under theCSPPwere extended when the temporary pandemic emergency purchase programme (PEPP) was announced. Bonds with an initial maturity of 365/366days or less were eligible for purchase with a minimum remaining maturity of 28days under both thePEPPand theCSPP. In this context, non-financial commercial paper (CP) with adequate credit quality were also eligible for purchase under theCSPP.
