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. On 26 October 2017 the Governing Council decided that net purchases under the asset purchase programme would be reduced from a monthly pace of EUR 60 billion to a monthly pace of EUR 30 billion from January 2018 until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
At the beginning of the programme the monthly purchase target was EUR 60 billion on average (3/2015 – 3/2016), after which monthly purchases were increased to EUR 80 billion a month (4/2016 – 3/2017). April 2017 onwards the monthly purchase pace was brought back to EUR 60 billion until the end of 2017 (4-12/2017).
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 Bank of Finland participates in the implementation of the purchase programmes. Purchase volumes by the Bank of Finland are reflected on its balance sheet. Weekly and monthly net 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)
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)
On 10 March 2016, the Governing Council decided to initiate a corporate sector purchase programme (CSPP) as part of the expanded asset purchase programme. Purchases under the new programme commenced on 8 June 2016. The programme is carried out by 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
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. As of 28th of March, and 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.
Securities lending via Euroclear
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
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 EAPP team: tel. +358 9 183 7021 or email: eapp(at)bof.fi.