ECB Asset Purchases Update

The ECB has recently spent €22bn in purchasing government debt (thought to be primarily Italian and Spanish bonds) – the most the central bank has spent in any week since it began the programme in May last year, surpassing the €16.5bn euros spent in the first week, when it targeted Greek bonds.  The value of bonds now held under the SMP (Securities Market Programme) stands at €96bn.
Reuters, 15 August 2011

As usual, the bonds are bought from the secondary market (direct purchases from governments are not permitted) and the asset purchases do not score as QE since the liquidity impact is sterilised. As the ECB itself states on its website,

Securities Markets Programme
Interventions by the Eurosystem in public and private debt securities markets in the euro area to ensure depth and liquidity in those market segments that are dysfunctional. The objective is to restore an appropriate monetary policy transmission mechanism, and thus the effective conduct of monetary policy oriented towards price stability in the medium term. The impact of these interventions is sterilised through specific operations to re-absorb the liquidity injected and thereby ensure that the monetary policy stance is not affected.”

For further details about the ECB’s response to the financial crisis, see
The ECB’s Non-Standard Measures – Impact and Phasing Out, ECB Monthly Bulletin, July 2011

The securities-market based measures are dealt with in more detail in the following:
ECB Securities Markets Programme terms, May 2010
ECB Covered Bond Purchase Programme completed, June 2010 (also see the final report) – remember the CBBP did not involve purchases of government debt and allowed for purchases from the primary market)

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