Asset purchase programme (APP)
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 aims to lower long-term interest rates and provide additional liquidity in order to safeguard price stability in the medium term.
Since the start of APP asset purchases, net purchase volumes have been adjusted regularly, with the following volumes purchased.
- March 2015 to March 2016: €60 billion
- April 2016 to March 2017: €80 billion
- April 2017 to December 2017: €60 billion
- January 2018 to September 2018: €30 billion
- October 2018 to December 2018: €15 billion
- January 2019 to October 2019: no net purchases
- November 2019 to March 2022: €20 billion (a temporary €120 billion envelope was added from March to December 2020)
- April 2022: €40 billion
- May 2022: €30 billion
- June 2022: €20 billion
- July 2022 onwards: no net asset purchases
On 9 June 2022, the Governing Council decided to end net asset purchases in the APP effective 1 July 2022. The ECB Governing Council intends to continue reinvestment for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance.Every week, the latest APP figures are published in the Eurosystem's consolidated weekly financial statement.
Third covered bond purchase programme (CBPP3)
The ECB Governing Council decided on the operational details of the third covered bond purchase programme (CBPP3) on 2 October 2014. The objective of the CBPP3 is 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 20 October 2014 and cover both the primary and secondary markets.
Asset-backed securities purchase programme (ABSPP)
The ECB's press release dated 2 October 2014 also outlined the operational details of the asset-backed securities (ABS) purchase programme. The purchases of simple and transparent ABSs issued by the private sector on the primary and secondary markets began on 21 November 2014. Purchases under the ABSPP are 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 22 January 2015, the ECB unveiled the public sector purchase programme (PSPP), which consists of the purchase of bonds issued by euro area central governments, agencies and European institutions. On 3 December 2015, the ECB Governing Council decided to extend this to include regional and local government bonds. In its introductory statement to the press conference of 10 March 2016, the ECB Governing 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 the PSPP, purchases of securities issued by international and supranational institutions will be subject to loss sharing. The ECB Governing Council reduced the share of such securities purchased under the PSPP from 12% to 10% on 10 March 2016. These securities are purchased only by national central banks. The remaining asset purchases are made by the NCBs and the ECB. The NCBs essentially 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%, the ECB’s share of the PSPP purchases, for which potential losses would have to be shared, was increased from 8% to 10%. This implies that 20% of the asset purchases under the PSPP remain subject to a regime of risk sharing, while 80% of the purchases are excluded from risk sharing.
Purchases began on 9 March 2015 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 the PSPP pursuant 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 10 March 2016, the ECB Governing Council decided that the APP would be extended to include outright purchases of investment-grade euro-denominated bonds issued by non-bank corporations. This corporate sector purchase programme (CSPP) enables 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 8 June 2016 and are normally conducted in both the primary and secondary markets (for public undertakings in the secondary market only, as under the PSPP). Purchases under the CSPP are 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 the CSPP were extended when the temporary pandemic emergency purchase programme (PEPP) was announced. From now on, bonds with an initial maturity of 365/366 days or less are eligible for purchase with a minimum remaining maturity of 28 days under both the PEPP and the CSPP. In this context, non-financial commercial paper (CP) with adequate credit quality is also eligible for purchase under the CSPP.