Outright monetary transactions (OMTs)
To safeguard an appropriate monetary policy transmission and the singleness of monetary policy, the Governing Council of the ECB specified, on 6 September 2012, a set of technical features for outright monetary transactions (OMTs) in the secondary sovereign bond markets. A necessary condition for conducting OMTs is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme (enhanced conditions credit line, or ECCL), provided that they include the possibility of EFSF/ESM primary market purchases and that a Member State has bond market access. Hitherto, the necessary preconditions set by the Governing Council of the ECB for conducting OMTs in the secondary markets for sovereign bonds have not been fulfilled by any euro area country. Therefore, purchases are not currently being made.
The Governing Council of the ECB will consider OMTs if they are warranted from a monetary policy perspective and as long as programme conditionality is fully respected. Following a thorough assessment, the Governing Council of the ECB will decide on the start, continuation and suspension of OMTs in full discretion and acting in accordance with its monetary policy mandate. Any OMTs will be focused on the shorter end of the yield curve and, in particular, on sovereign bonds with a maturity of between one and three years. No ex ante quantitative limits are set on the size of OMTs. Any liquidity generated by OMTs is to be fully reabsorbed by way of targeted operations.
Securities markets programme (SMP)
The ECB Governing Council’s decision of 6 September 2012 to conduct outright monetary transactions (OMTs) marked the termination of the securities markets programme (SMP). Given the acute tension observed in certain market segments, the Governing Council of the ECB decided on 10 May 2010 to carry out a programme for securities markets. This programme permitted interventions in the public and private debt securities markets to ensure depth and liquidity in those markets. The programme, which was a temporary component of the Eurosystem’s single monetary policy, was designed to remedy malfunctions in securities markets and restore an appropriate monetary policy transmission mechanism. The SMP did not affect the Eurosystem’s monetary policy stance. To ensure that this was the case, targeted operations were conducted each week in order to reabsorb the liquidity provided by the SMP (by offering time deposits). The programme was conducted without defining an intervention volume upfront. The liquidity provided as part of the SMP was absorbed by 10 June 2014, following discontinuation of the programme. The securities in the SMP portfolio are held to maturity.
First and second covered bond purchase programmes (CBPP and CBPP2)
The objective of the two covered bond purchase programmes was partly to help ease financing conditions for credit institutions and enterprises and improve market liquidity in important segments of the market for private debt securities. The European Central Bank published a first “Decision on the implementation of the covered bond purchase programme (ECB/2009/16)” on 2 July 2009, setting out the basic rules for the covered bond purchase programme (CBPP), which was launched in July 2009 and concluded in June 2010. In October 2011, the Governing Council of the ECB decided to conduct another covered bond purchase programme (CBPP2), which was launched in November 2011. The relevant “Decision on the implementation of the second covered bond purchase programme (ECB/2011/17)” was published on 3 November 2011. CBPP2 was terminated on 31 October 2012. The Eurosystem intends to hold the securities in both CBPP portfolios to maturity.