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Eurosystem's asset purchase programmes

The Governing Council of the European Central Bank (ECB), as part of its mandate to maintain price stability, has launched a number of asset purchase programmes in recent years.

In an environment where key ECB interest rates are at record low levels, asset purchases provide monetary stimulus to the economy.

These purchases enhance the expansionary stance of monetary and financing conditions, making recourse to financing cheaper for governments, firms and households, thus supporting investment and consumption and ultimately contributing to a return of inflation to levels below but close to 2%.

Four asset purchase programmes are currently under way, broadly included in the asset purchase programme – APP, through which private and public debt securities are purchased in order to meet the risks associated with a protracted period of low inflation levels:

  • 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.

Acquisitions are intended to be carried out until the Governing Council sees a sustained adjustment in the path of inflation in the euro area that is consistent with the inflation target. 

On 18 March 2020, the Governing Council decided to create a new purchase programme of private and public sector assets, the pandemic emergency purchase programme (PEPP), to counter the risks arising from the COVID-19 pandemic (for further details, see Related pages).

The Banco de Portugal has been involved in the implementation of the PSPP, the PEPP and the CBPP3 since the beginning, conducting purchases in the secondary market in the first two cases and in the primary and secondary markets in the third.

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

Similarly, the implementation of the ABSPP is carried out by a limited number of central banks, with the Banque de France being responsible for purchasing securities in five jurisdictions, including Portuguese asset-backed securities. 

 

Lending of holdings purchased by the Eurosystem under the public sector purchase programme (PSPP) and the pandemic emergency purchase programme (PEPP)

The securities purchased by the Eurosystem under the PSPP and the PEPP are made available for securities lending in a decentralised manner by a number of central banks.

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

The primary targets are market participants with market making obligations.

Further details on the securities lending arrangements of both the ECB and the national central banks can be found on the ECB's website.

Banco de Portugal securities lending arrangements 

The Banco de Portugal is making the holdings of securities purchased under the public sector purchase programme (PSPP) and the pandemic emergency purchase programme (PEPP) available for securities lending.

The implementation of this activity is currently delegated to Euroclear Bank SA/NV through GC Access, a non-cash collateral programme, and to Clearstream Banking S.A. (CBL) through ASLplus.  

Holdings purchased by the Banco de Portugal under the Securities Markets Programme (SMP) are also 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) Securities Lending and Borrowing Programmes for the purpose of mitigating settlement failures. The terms and conditions of the programmes are the standard conditions defined by Euroclear Bank SA/NV and Clearstream Banking S.A. (CBL).

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