The Governing Council of the European Central Bank (ECB), as part of its mandate to maintain price stability, and in a low key ECB interest rate environment, has launched a number of asset purchase programmes, which provide monetary stimulus to the economy. 

These purchases exacerbate the expansionary nature of monetary and financial conditions, making access to financing cheaper for governments, firms and households. Therefore, they tend to support investment and consumption and preserve ample liquidity conditions.

The asset purchase programme (APP) comprises four programmes, through which private and public debt securities were purchased: 

• the asset-backed securities purchase programme (ABSPP), announced on 2 October 2014; 
• the covered bond purchase programme (CBPP3), announced on 2 October 2014; 
• the public sector purchase programme (PSPP), announced on 22 January 2015;
• the corporate sector purchase programme (CSPP), announced on 10 March 2016.

Net asset purchases under the APP ceased at the end of June 2022. The principal payments from maturing securities were reinvested, in full, up to February 2023. Starting in March 2023 and during the second quarter of 2023, the Eurosystem did not reinvest, in full, the payments from maturing securities and, as such, the APP portfolio decreased, on average, by €15 billion per month. The Governing Council discontinued the reinvestments under the APP as of July 2023.

On 18 March 2020, the Governing Council decided to establish a new public and private sector asset purchase programme, the pandemic emergency purchase programme (PEPP), to counter the risks stemming from the COVID-19 pandemic (for more information, see related pages). Net asset purchases under the PEPP ended in April 2022. The principal payments from maturing securities will be reinvested, in full, at least until the end of 2024.

The Banco de Portugal has been involved in the implementation of the PSPP, the PEPP and the CBPP3 since their inception, carrying out purchases in the secondary market for the first two programmes and in the primary and secondary markets for the CBPP3.

The implementation of the CSPP is carried out by a limited number of national central banks. Nationale Bank van België/Banque nationale de Belgique was responsible for implementing the CSPP in nine jurisdictions, including the Portuguese corporate bond market.

The implementation of the ABSPP is also carried out by a limited number of central banks. In this case, Banque de France was responsible for purchasing securities in five jurisdictions, including Portuguese asset-backed securities.

Transmission Protection Instrument (TPI)

In July 2022, the Governing Council found it necessary to create an instrument that ensures that the monetary policy stance is transmitted smoothly across all euro area countries. The singleness of the Governing Council’s monetary policy is a precondition for the ECB to be able to deliver on its price stability mandate. Further details on the TPI can be found on the ECB’s website.

Lending of holdings purchased by the Eurosystem under the asset purchase programme (APP) and the pandemic emergency purchase programme (PEPP)

Public sector  and non-financial corporate sector securities purchased by the Eurosystem under the APP and PEPP have been made available for decentralised securities lending by the ECB and by the national  central banks.

The aim of securities lending is to support bond and repo market liquidity.

The Eurosystem primarily targets market participants with market-making obligations.

Eurosystem central banks adhere to a pricing principle that ensures that the Eurosystem securities lending facilities serve as an effective backstop, supporting bond and repo market liquidity without unduly curtailing normal repo market activity.

Eligible counterparties can borrow securities against other securities as collateral at a fixed minimum fee of 5 basis points, or a fee based on prevailing market rates, whichever is higher (fee is generally understood as the difference between the repo and reverse repo rates). Eligible counterparties can also borrow securities against cash as collateral at a rate equal to the rate of the deposit facility minus 20 basis points or the prevailing market repo rate, whichever is lower.

In addition, the Eurosystem central banks could consider making its holdings of covered bonds and ABS available for securities lending.Further details on the securities lending arrangements of both the ECB and the Eurosystem central banks can be found on the ECB’s website.

The Banco de Portugal’s securities lending arrangements 

Securities purchased by the Banco de Portugal under the APP and the PEPP are available for securities lending at Euroclear Bank SA/NV through GC Access, a non-cash collateral programme, and at Clearstream Banking S.A. (CBL), through ASLplus.   

Holdings purchased by the Banco de Portugal under the Securities Markets Programme (SMP) are available for lending under the same conditions. 

The Banco de Portugal also participates in the Euroclear Bank SA/NV and Clearstream Banking S.A. (CBL) programmes for mitigating settlement fails. The terms and conditions of these programmes are those defined by Euroclear Bank SA/NV and Clearstream Banking S.A. (CBL).

In August 2023, Banco de Portugal holdings were made available for bilateral loans to counterparties. This activity is implemented in line with the general principles of the Eurosystem and in accordance with the risk and operational criteria defined by Banco de Portugal. The bilateral loans are carried out under a Global Master Repurchase Agreement (GMRA)s. 

Market participants may contact the Banco de Portugal for further information at: bdp_pspp_securities_lending@bportugal.pt