Asset purchase programmes

The expanded asset purchase programme (APP) adds the purchase programme for public sector securities to the existing private sector asset purchase programmes to address the risks of a too prolonged period of low inflation. The Pandemic Emergency Purchase Programme (PEPP) was established in response to a specific, extraordinary and acute economic crisis, which could jeopardise the objective of price stability and the proper functioning of the monetary policy transmission mechanism.

The various purchase programmes

  • third covered bond purchase programme (CBPP3)
  • asset-backed securities purchase programme (ABSPP)
  • public sector purchase programme (PSPP)
  • corporate sector purchase programma (CSPP)
  • Pandemic emergency purchase programme (PEPP)

The ECB Governing Council decided on 18 March to launch a new temporary programme for purchasing private and public sector securities in a bid to contain the serious risks for the monetary policy transmission mechanism and the outlook for the euro area as a result of the outbreak and exponential spread of coronavirus, COVID-19: the pandemic emergency purchase programme (PEPP).

On 4 June, the Governing Council decided to raise the amount available for the PEPP by €600 billion to a total of €1,350 billion. The period for carrying out net asset purchases under the has been extended until at least the end of June 2021. The Governing Council will in any case continue with net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over. The principal payments from securities purchased under the PEPP which have reached maturity will be reinvested until at least the end of 2022. The future phase-out of the PEPP portfolio will in any case be managed in such a way as to avoid any interference with the appropriate monetary stance.

Securities bought up under the PEPP come on top of the purchases under the current asset purchase programme (APP). From March 2015 up to the end of March 2016, the average monthly asset purchases under the APP worked out at €60 billion and between April 2016 and March 2017, it was €80 billion, while the amount purchased from April 2017 to the end of December 2017 again came to €60 billion. From January to September 2018 inclusive, average monthly purchases amounted to €30 billion, from October 2018 to the end of December 2018, the corresponding figure was €15 billion. Since November 2019, the average monthly asset purchases under the current APP have amounted to €20 billion.

Net purchases under the APP will be continued at a monthly pace of €20 billion, along with the purchases related to the extra temporary package of € 120 billion, until the end of the year, as decided by the ECB Governing Council on 12 March. The Governing Council is still expecting the monthly net asset purchases under the APP to continue as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the ECB’s key interest rates. Full reinvestment of the principal payments from securities purchased under the APP which have reached maturity, will continue, and for an extended period of time past the moment the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

 

Further information about the Eurosystem’s asset purchase programmes can be found on the ECB’s website by clicking on this link: Asset purchase programmes and Pandemic emergency purchase programme.

 

Securities lending of assets purchased under the APP and PEPP

As announced at the ECB Governing Council meetings on 5 March 2015 and 1 June 2016, the assets acquired under the public sector purchase programme (PSPP) and the corporate sector purchase programme (CSPP) will be released in a decentralised manner for securities lending operations to support bond and repo market liquidity. Assets acquired via the pandemic emergency purchase programme (PEPP) are also available for securities lending operations, under the same conditions as the asset purchase programme (APP). For further information on the Eurosystem’s general framework for lending operations, see: Securities lending of holdings under the asset purchase programme (APP) and pandemic emergency purchase programme (PEPP).

Securities lending under the PSPP and the PEPP (public sector)

The National Bank of Belgium will lend the public sector securities purchased under the PSPP and the PEPP (see list of available ISIN codes in appendix) via bilateral repurchasing operations (repos) or bilateral repos combined with bilateral reverse repos with counterparties that have concluded a contract with the NBB for repos in euro.

Further information can be found in the following documents:

Securities lending under the CSPP and the PEPP (corporate sector)

Also under the CSPP and the PEPP, the National Bank of Belgium will offer the possibility to lend corporate securities via bilateral repos combined with bilateral reverse repos with counterparties that have a contract with the NBB for repos. Alongside this bilateral lending, the NBB has decided to take part in Euroclear Bank SA/NV’s Automatic Securities Lending and Borrowing Programme.

Further information can be found in the following documents:

Contact

Market participants can contact NBB’s Front Office desk via e-mail at forex@nbb.be or by phone on +32 2 221 4971.