Pandemic emergency purchase programme (PEPP)

The pandemic emergency purchase programme (PEPP) is a temporary asset purchase programme of private and public sector securities, as purchased under the existing APP. In addition to the net purchases under the APP, non-financial commercial paper with a minimum remaining maturity of at least 28 days (APP: six months) is eligible for purchase under the PEPP as well as public sector securities with a minimum remaining maturity of 70 days (APP: one year).

Unlike the APP, net purchases under the PEPP were oriented to an overall envelope which did not have to be used in full. The initial envelope was €750 billion. On 4 June 2020, the ECB Governing Council decided to increase the envelope by €600 billion; it was increased by a further €500 billion on 10 December 2020 to a total of €1,850 billion. Net purchases under the PEPP are conducted in addition to those under the APP.

PEPP purchases started on 26 March 2020. They were made to the extent deemed necessary and proportionate to counter the threats posed by the extraordinary economic and market conditions on the ability of the Eurosystem to fulfil its mandate. For the purchases of public sector securities, the benchmark allocation across jurisdictions was the capital key of the national central banks. The PEPP purchases were also designed to help ensure the smooth transmission of monetary policy in all jurisdictions of the euro area in the event that the pandemic triggers market turmoil such as that experienced in spring 2020 and, in particular, to prevent market fragmentation. To this end, purchases under the PEPP were conducted in a flexible manner. This allowed for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions. Combined with other measures, the PEPP aimed to preserve favourable financing conditions during the pandemic. This temporary programme was envisaged to last until the ECB Governing Council judges that the COVID-19 crisis phase is over. On 16 December 2021, the ECB Governing Council decided to discontinue net purchases under the PEPP at the end of March 2022. With its decision of 14 December 2023, the ECB Governing Council intends to reduce the PEPP portfolio by €7.5 billion per month on average and to discontinue reinvestments under the PEPP at the end of 2024.

As with the APP, the bulk of PEPP purchases are made by the Eurosystem national central banks; a small proportion is made by the ECB itself. The same risk-sharing principles apply for the PEPP as for the APP.