On 22 January 2015, the Governing Council of the European Central Bank (ECB) announced an expanded asset purchase programme (EAPP). The programme aims at fulfilling the ECB’s price stability mandate and addressing the risks of a too prolonged period of low inflation.
The expanded asset purchase programme consists of the public sector purchase programme (PSPP), the asset-backed securities purchase programme (ABSPP), the covered bond purchase programme (CBPP3) and the corporate sector purchase programme (CSPP).
The net asset purchase targets of the expanded asset purchase programme over the period 2015–2018 were as follows:
- 03/2015-03/206: EUR 60 billion
- 04/2016-03/2017: EUR 80 billion
- 04/2017-12/2017: EUR 60 billion
- 01-09/2018: EUR 30 billion
- 10-12/2018: EUR 15 billion
Net asset purchases under the programme came to an end at the end of 2018 and in January 2019 the programme moved to a reinvestment phase. Between January 2019 and October 2019, the Eurosystem fully reinvested the principal payments from maturing securities held in the APP portfolios.
On 12 September 2019 the ECB Governing Council decided that “net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November 2019. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.”
In addition, reinvestments of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time past the date on which the Governing Council begins to raise 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.
The Bank of Finland participates in the implementation of the purchase programmes. Purchase volumes by the Bank of Finland are reflected on its balance sheet. Purchases under the purchase programmes are published on the ECB website.
The third covered bond purchase programme (CBPP3)
The third covered bond purchase programme was launched in October 2014. Under this programme, the Eurosystem purchases covered bonds issued by banks on the primary and secondary markets. The securities to be purchased will be subject to the eligibility criteria for collateral used in refinancing operations. The Eurosystem conducted the first and second covered bond purchase programmes in 2009–2012.
Asset-backed securities purchase programme (ABSPP)
The asset-backed securities purchase programme was launched in November 2014. Under this programme, the Eurosystem purchases simple and transparent asset-backed securities on the primary and secondary markets. The purchases are conducted by six national central banks acting on behalf of the Eurosystem.
Public sector purchase programme (PSPP)
The Public sector purchase programme was launched in March 2015. Under the public sector purchase programme, the Eurosystem purchases bonds issued by regional and local governments, recognised agencies and international and supranational institutions located in the euro area. The Eurosystem national central banks purchase mainly bonds issued by their own governments, on the basis of the ECB’s capital key, i.e. relative to the size of their economy. These types of purchases account for 80% of total purchases, and the risks are carried by the national central banks themselves. The remaining 20% are subject to risk-sharing and comprise bonds issued by EU supranational institutions and purchases by the ECB.
Corporate sector purchase programme (CSPP)
The corporate sector purchase programme (CSPP) was launched in June 2016. Implementation of the programme is the responsibility of six national central banks, including the Bank of Finland, acting on behalf of the Eurosystem and coordinated by the ECB.
Securities lending of Bank of Finland’s EAPP holdings
Securities lending via Euroclear
The Bank of Finland’s CBPP3, CSPP and PSPP holdings are available for securities lending under Euroclear’s Securities Lending and Borrowing Programme as well as in the GC Access Securities Lending Programme. The terms and conditions of the automatic Securities Lending and Borrowing Programme are the standard conditions set forth by Euroclear. In the GC Access Securities Lending Programme, market participants may borrow securities subject to their availability (open repo). The lending programme is operated according to terms and conditions set out by the Bank of Finland. Transactions under the programme are to take place on a cash neutral basis.
Bilateral lending against cash collateral
For securities bought under the PSPP, the Bank of Finland's securities trading counterparties are also eligible for bilateral securities lending against cash collateral via repurchase agreements, provided that they fulfil all legal requirements, in particular the relevant contractual documentation.
The repo transactions against cash collateral will be conducted bilaterally at a rate equal to the lower of the rate of the ECB deposit facility minus 30 basis points and the prevailing market repo rate. Cash collateral transactions have one-week maturity and may be rolled over. For more information on the bilateral repo terms, please contact the Bank of Finland's EAPP team.
A list of CSPP and PSPP holdings available for lending will be published on a weekly basis on this site.
For further information on the lending programmes, please contact Euroclear or the Bank of Finland’s EAPP team: tel. +358 9 183 7021 or email to eapp(at)bof.fi.