Asset purchase programme (APP)
On 22 January 2015, the ECB announced the launch of an expanded asset purchase programme (APP). The APP broadened the ECB'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 purchase programme for covered bonds (CBPP3), which were launched at the end of 2014. On 10 March 2016, the ECB Governing Council took the decision to add a non-bank corporate sector purchase programme (CSPP) to the asset purchase programme. Initially, monthly asset purchases amounted to €60 billion. With effect from 1 April 2016, the volume of monthly net purchases was raised from €60 billion to €80 billion. On 1 April 2017, the volume was scaled back to €60 billion again. From January 2018 to September 2018, €30 billion worth of assets were purchased each month, while only €15 billion worth were purchased each month in the final quarter of the year. Net purchases have been discontinued as of 2019, although principal payments from maturing securities will be reinvested (reinvestment phase). This reinvestment is to be carried out beyond the date of the first interest rate hike and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Every week, the latest APP figures are published in the Eurosystem's consolidated weekly financial statement.
Covered bond purchase programme 3 (CBPP3)
The ECB announced the operational details of the third covered bond purchase programme (CBPP3) on 2 October 2014. The objective of 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. To achieve price stability, the Eurosystem aims to lower long-term interest rates and provide additional liquidity.
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 Nationale Bank van België/Banque Nationale de Belgique, Banque de France, Banca d’Italia, De Nederlandsche Bank, 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 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 of European institutions will be subject to loss sharing. The ECB reduced the share of such securities purchased under the PSPP from 12% to 10% on 10 March 2016. These securities will be purchased only by national central banks (NCBs). The remaining asset purchases will be made by the NCBs and the ECB. The NCBs will essentially focus on public sector bonds issued by their home country. Hypothetical losses stemming from bonds issued by central, state and local governments as well as agencies will be borne by the respective NCB. Consistent with the reduction in the share of securities purchased 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 will continue to be subject to a regime of risk sharing, while 80% of the purchases will be excluded from risk sharing.
Purchases began on 9 March 2015 and only take place in the secondary market.
Corporate sector purchase programme (CSPP)
Also on 10 March 2016, the ECB Governing Council announced that the APP would be extended to include purchases of investment-grade euro-denominated bonds issued by non-bank corporations. Henceforth, the Eurosystem will be able under the new corporate sector purchase programme (CSPP) to buy bonds issued by non-banks domiciled in the euro area. Securities issued by credit institutions and by entities with a parent company which belongs to a banking group will not be eligible.
The purchases began on 8 June 2016 and, since the start of the reinvestment phase and until further notice, they will only take place on the secondary market. 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, Banca d’Italia, Suomen Pankki – Finlands Bank, the Banco de España and the Deutsche Bundesbank.
Securities lending under the APP
The Bundesbank generally makes any holdings that it has purchased under the PSPP and the CSPP available for securities lending.
The Bundesbank has been a participant in Clearstream Banking Luxembourg's (CBL) "Automated Securities Lending (ASL)" programme since the start of April 2015. The ASL programme ensures that borrowers' trades do not fail.
Since 5 October 2015, the Bundesbank has additionally been making available any holdings that it has purchased under the PSPP via the CBL's strategic lending facility "ASLplus". CSPP holdings, too, have been available via this facility since 18 July 2016. ASLplus allows market participants to borrow these securities at a minimum spread above the current rate for general collateral. The Bundesbank offers the relevant securities on a cash-neutral basis. The maximum maturity of a securities lending transaction is 35 days.
Since the end of September 2016, the Bundesbank has also been making holdings purchased under the PSPP available in the form of bilateral lending transactions. These take place as repo-/reverse repo transactions. Since 15 December 2016 it is possible to borrow securities via a repo transaction without an offsetting reverse repo (up to a certain amount). The European Master Agreement (EMA) serves as the legal basis for these transactions. The maximum maturity of bilateral transactions is seven days. Further information can be requested using the following e-mail address: email@example.com.
A list of the securities currently available for lending can be downloaded via the following link.