To address the risks of a too prolonged period of low inflation, the Governing Council of the ECB introduced the expanded asset purchase programme.
This programme includes:
- The asset-backed securities purchase programme (ABSPP). Purchases under the ABSPP started in November 2014.
- The third Covered Bond Purchase Programme (CBPP3). Purchases under the CBPP3 started in October 2014.
- The Public Sector Purchase Programme (PSPP), encompassing marketable debt instruments issued by central governments, agencies and international or supranational institutions located in the euro area. Purchases under the PSPP started in March 2015.
- The Corporate Sector Purchase Programme (CSPP). Purchases under the CSPP started in June 2016.
The decision on the expanded APP was taken by the ECB Governing Council in an environment in which most of the indicators of actual and expected inflation in the euro area had moved towards their historic lows. Private and public asset purchases provide monetary stimulus to the economy at a time when the ECB’s key interest rates have reached their effective lower bound. They also lead to a further easing of monetary and financial conditions, reducing the cost of access to bank credit for businesses and households. This tends to support investment and consumption and ultimately helps bring inflation back to levels of below but close to 2%.
The Bank of Greece has participated in CBPP3 since the launch of the programme. It has also participated in the PSPP, purchasing bonds issued by development banks and supranational institutions located in the euro area.
Net purchases under the expanded APP ended in December 2018. The total stock of assets acquired by the Eurosystem at the end of the expanded APP is shown in the table below:
Eurosystem holdings under the asset purchase programme (as of end-December 2018)
| Programme | Holdings (in EUR millions) |
|---|
ABSPP | 27,518 |
CBPP3 | 262,201 |
CSPP | 178,050 |
PSPP | 2,102,048 |
Total APP | 2,569,817 |
Since January 2019, and for as long as the ECB Governing Council deems necessary, the Eurosystem has been implementing a policy of reinvesting the principal payments from maturing securities purchased underthe asset purchase programme.
In November 2019 the Governing Council announced the restart of net purchases under the programme of €20 billion per month, which expects 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 March 2020, after the coronavirus outbreak, a temporary envelope of additional net asset purchases of €120 billion was added to the existing asset purchase programme (APP), until the end of the year, to support favourable financing conditions for the real economy in times of heightened uncertainty.