Editing European Central Bank (section)

=== Christine Lagarde's era (2019 – ) ===
In July 2019, EU leaders nominated [[Christine Lagarde]] to replace Mario Draghi as ECB President. Lagarde resigned from her position as managing director of the [[International Monetary Fund]] in July 2019<ref>{{Cite news|date=2019-07-16|title=Christine Lagarde resigns as head of IMF|language=en-GB|work=BBC News|url=https://www.bbc.com/news/business-49009226|access-date=2021-04-03}}</ref> and formally took over the ECB's presidency on 1 November 2019.<ref>{{Cite news|last1=Hujer|first1=Marc|last2=Sauga|first2=Michael|date=30 October 2019|title=Elegance and Toughness: Christine Lagarde Brings a New Style to the ECB|work=Spiegel Online|url=https://www.spiegel.de/international/europe/christine-lagarde-takes-over-at-the-european-central-bank-a-1294033.html|access-date=11 November 2019}}</ref>

Lagarde immediately signalled a change of style in the ECB's leadership. She embarked the ECB on a strategic review of the ECB's monetary policy strategy, an exercise the ECB had not done for 17 years. As part of this exercise, Lagarde committed the ECB to look into how monetary policy could contribute to [[climate change mitigation|address climate change]],<ref>{{Cite web|date=2019-08-29|title=Lagarde promises to paint the ECB green|url=https://www.politico.eu/article/christine-lagarde-promises-to-paint-the-ecb-green-european-central-bank/|access-date=2021-04-03|website=POLITICO|language=en-US}}</ref> and promised that "no stone would be left unturned." The ECB president also adopted a change of communication style, in particular in her use of social media to promote gender equality,<ref>{{Cite web|date=2021-03-05|title=Christine Lagarde's uphill battle for ECB gender equality|url=https://www.politico.eu/article/christine-lagarde-ecb-gender-equality/|access-date=2021-04-03|website=POLITICO|language=en-US}}</ref> and by opening dialogue with civil society stakeholders.<ref>{{Cite web|date=2019-12-04|title=Christine Lagarde meets with Positive Money Europe|url=https://www.positivemoney.eu/2019/12/meeting-ecb-president-christine-lagarde/|access-date=2021-04-03|website=Positive Money Europe|language=en-GB}}</ref><ref>{{Cite news|date=2020-10-21|title=Lagarde turns to civil society in ECB transformation effort|language=en|work=Reuters|url=https://www.reuters.com/article/us-ecb-lagarde-idUKKBN276166|access-date=2021-04-03}}</ref>

==== The ECB's response to COVID-19 pandemic ====
The onset of the [[COVID-19 pandemic]] precipitated an unprecedented crisis, profoundly impacting global public health, economies, and societal structures on an unparalleled scale. The crisis led to renewed tensions in European sovereign bonds markets, marked by a growing spreads between the interest rates paid by Eurozone member states,<ref name="Runkel-2022">{{Cite journal |last=Runkel |first=Corey N |date=2022-07-15 |title=Eurozone: Pandemic Emergency Purchase Program |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4175432 |journal=Journal of Financial Crises |volume=4 |issue=2 |pages=1570–1580 |ssrn=4175432 |via=SSRN}}</ref> which spurred important concerns that the Eurozone couild be headed towards a new [[European debt crisis|sovereign debt crisis]].

On 12 March 2020, the ECB announced a set of policy measures such as an additional package of net asset purchases of €120 billion by the end of 2020 under the already existing APP, and more favorable terms on the TLTRO III. During the press conference, Christine Lagarde declared that the ECB "[...] is not here to close spreads."<ref name="Tesche-2022b" /><ref name="Lagarde-2020c">{{Cite journal |last=Lagarde |first=Christine |date=2020-03-12 |title=Press conferenece |url=https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200312~f857a21b6c.en.html |access-date=2023-12-06 |website=EUropean Central Bank - Eurosystem}}</ref><ref name="Balmer-2020b">{{Cite news |last1=Balmer |first1=Crispian |last2=Mackenzie |first2=James |date=2020-03-12 |title=Italy furious at ECB's Lagarde 'not here to close spreads' comment |url=https://www.reuters.com/article/us-ecb-policy-italy-minister/italy-furious-at-ecbs-lagarde-not-here-to-close-spreads-comment-idUSKBN20Z3DW/ |access-date=2023-12-07 |work=Reuters}}</ref> This particular statement triggered a sudden negative reaction on financial markets, with a widening of yield spreads in Spain, Italy and Greece.<ref name="Moessner-2022">{{Cite journal |last1=Moessner |first1=Richhild |last2=de Haan |first2=Jakob |date=2022 |title=Effects of monetary policy announcements on term premia in the euro area during the COVID-19 pandemic |journal=Financial Research Letters |volume=44 |issue=44 |pages=1–4 |doi=10.1016/j.frl.2021.102055 |pmc=9014297 |pmid=35463215}}</ref>

===== Pandemic Emergency Purchase Programme (PEPP) =====
On 19 March 2020—less than one week after Lagarde's unfortunate statements on the spreads—the ECB announced by surprise the launch of the Pandemic Emergency Purchase Programme (PEPP) worth €750 billion to boost liquidity in the European economy and to contain any sharp increases in sovereign yield spreads.<ref name="Sciorilli Borrelli-2020c">{{Cite web |last=Sciorilli Borrelli |first=Silvia |date=2020-03-19 |title=ECB rises to expectations with massive bond-buying move |url=https://www.politico.eu/article/the-ecb-rises-up-to-expectations-launches-massive-bond-buying-program/ |access-date=2023-12-06 |website=POLITICO |language=en}}</ref><ref>{{Cite journal |date=2020-03-18 |title=ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP) |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html#:~:text=The%20ECB%20will%20not%20tolerate,jurisdictions%20of%20the%20euro%20area. |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> This announcement led to an immediate reboot in stock prices<ref name="Moessner-2022" /><ref name="Ortmans-2021">{{Cite journal |last1=Ortmans |first1=Aymeric |last2=Tripier |first2=Fabien |date=2021-06-09 |title=COVID-induced sovereign risk in the euro area: When did the ECB stop the spread? |journal=European Economic Review |volume=137 |issue=137 |pages=2–3 |doi=10.1016/j.euroecorev.2021.103809 |pmc=9750059 |pmid=36536819}}</ref><ref name="Benigno-2022">{{Cite journal |last1=Benigno |first1=Pierpaolo |last2=Canofari |first2=Paolo |last3=Di Bartolomeo |first3=Giovanni |last4=Messori |first4=Marcello |date=2022-07-16 |title=The ECB'sasset purchase programme: Theory, effects, and risks |url=https://onlinelibrary.wiley.com/doi/full/10.1111/joes.12521 |journal=Journal of Economic Surveys |volume=37 |issue=3 |pages=893–902 |doi=10.1111/joes.12521 |s2cid=250636847 |via=Wiley Online Library |hdl-access=free |hdl=10067/1896580151162165141}}</ref> and came one day after the spike of sovereign risk spreads.<ref name="Alberola-2022">{{Cite journal |last1=Alberola |first1=Enrique |last2=Cheng |first2=Gong |last3=Consiglio |first3=Andrea |last4=Zenios |first4=Stavros A. |date=2022-07-19 |title=Debt sustainability and monetary policy: the case of ECB asset purchases |url=https://www.bis.org/publ/work1034.htm |journal=BIS Working Papers |volume= |issue=1034 |pages=3–4}}</ref>

The PEPP was designed as a typical "[[quantitative easing]]" policy, under which the ECB is able to purchase securities from the private and public sector in a flexible manner.<ref name="Arnold-2020d">{{Cite web |last=Arnold |first=Martin |date=2020-06-04 |title=ECB boosts bond-buying stimulus package by €600bn |url=https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9 |access-date=2023-12-05 |website=Financial Times}}</ref><ref name="Tesche-2022b">{{Cite journal |last=Tesche |first=Tobias |date=2022-02-16 |title=Pandemic Politics: The European Union in Times of the Coronavirus Emergency |url=https://onlinelibrary.wiley.com/doi/10.1111/jcms.13303 |journal=Journal of Common Market Studies |volume=60 |issue=2 |pages=485–486 |doi=10.1111/jcms.13303 |s2cid=245528815 |via=Wiley Online Library}}</ref><ref name="Bertoldi-2023c">{{Cite journal |last1=Bertoldi |first1=Moreno |last2=Eriksgård |first2=Annika |last3=Orsini |first3=Kristian |last4=Pfeiffer |first4=Philipp |date=2023-07-28 |title=Where is the EU economy headed? The international dimension |url=https://www.sciencedirect.com/science/article/pii/S0161893823000728 |journal=Journal of Policy Modeling |volume=45 |issue=4 |pages=819–821 |doi=10.1016/j.jpolmod.2023.07.005 |s2cid=260307969 |via=Elsevier Science Direct}}</ref> The purpose of the PEPP was to stabilize sovereign bonds yields to low and stable levels, thus preventing self-fulfilling panics in financial markets as was the case during the [[European debt crisis]].<ref name="Tesche-2020a">{{Cite journal |last=Tesche |first=Tobias |date=2020-06-15 |title=The European Union's response to the coronavirus emergency: an early assessment |url=https://www.lse.ac.uk/european-institute/Assets/Documents/LEQS-Discussion-Papers/LEQSPaper157.pdf |journal=LSE 'Europe in Question' Discussion Paper Series |volume=157/2020 |pages=1–5 |via=SSRN}}</ref><ref name="Carnazza-2021">{{Cite journal |last1=Carnazza |first1=Giovanni |last2=Liberati |first2=Paolo |date=2021-04-10 |title=The asymmetric impact of the pandemic crisis on interest rates on public debt in the Eurozone |url=https://www.sciencedirect.com/science/article/pii/S0161893821000223/pdfft?md5=d558e4e98a05a43cda259897b42525c9&pid=1-s2.0-S0161893821000223-main.pdf |journal=Journal of Policy Modeling |volume=43 |issue=3 |pages=522–541 |doi=10.1016/j.jpolmod.2021.04.001 |s2cid=234834111 |via=Elsevier Science Direct}}</ref>

The PEPP was established as a separate purchase programme alongside the pre-existing Asset Purchase Programme (APP) with the sole purpose to respond to the economic and financial consequences of the COVID-19 crisis, and in particular prevent market fragmentations.<ref name="DB-2023">{{Cite web |title=Pandemic emergency purchase programme (PEPP) |url=https://www.bundesbank.de/en/tasks/monetary-policy/outright-transactions/pandemic-emergency-purchase-programme-pepp--831136 |access-date=2023-11-30 |website=Deutsche Bundesbank Eurosystem}}</ref><ref name="Grund-2020">{{Cite journal |last=Grund |first=Sebastian |date=2020-03-25 |title=Legal, Compliant and Suitable: The ECB's Pandemic Emergency Purchase Programme (PEPP) |url=https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=13475&context=ypfs-documents |journal=Hertie School Jacques Delors Centre |pages=1–3 |via=Elischolar}}</ref> While very similar, Contrary to the APP, the ECB decided to allow itself to deviate from the capital key. This temporal flexibility from the capital key meant that the ECB could more effectively prevent the rise of Italian and Spanish yield spreads.<ref name="Tesche-2020a" /><ref name="Borri-2021">{{Cite journal |last1=Borri |first1=Nicola |last2=di Giorgio |first2=Giorgio |date=6 February 2021 |title=Systemic risk and the COVID challenge in the european banking sector |url=https://www.sciencedirect.com/science/article/pii/S0378426621000315/pdf |journal=Journal of Banking and Finance |volume=140 |pages=9–12 |via=Elsevier Science Direct}}</ref><ref name="Blotevogel-2023">{{Cite journal |last1=Blotevogel |first1=Robert |last2=Hudecz |first2=Robert |last3=Vangelista |first3=Elisabetta |date=2024 |title=Asset purchases and sovereign bond spreads in the euro area during the pandemic |url=https://www.sciencedirect.com/science/article/pii/S0261560623001791 |journal=Journal of International Money and Finance |volume=140 |issue= |pages=1–8 |doi=10.1016/j.jimonfin.2023.102978 |access-date= |via=Elsevier Science Direct}}</ref><ref>{{Citation |title=Decision (EU) 2020/440 of the European Central Bank of 24 March 2020 on a temporary pandemic emergency purchase programme (ECB/2020/17) |date=2020-03-24 |url=http://data.europa.eu/eli/dec/2020/440/oj/eng |access-date=2023-11-30 |language=en}}</ref><ref name="Camous-2020b">{{Cite journal |last1=Camous |first1=Antoine |last2=Claeys |first2=Grégory |date=2020-10-26 |title=The evolution of European economic institutions during the COVID-19 crisis |journal=European Policy Analysis |volume=6 |issue=2 |pages=334–336 |doi=10.1002/epa2.1100 |pmid=34616911 |pmc=7753405 }}</ref><ref>{{Cite journal |last=Fabbrini |first=Federico |date=2022 |title=The Legal Architecture of the Economic Responses to COVID-19: EMU beyond the Pandemic |journal=Journal of Common Market Studies |volume=60 |issue=1 |pages=190 |doi=10.1111/jcms.13271 |doi-access=free }}</ref>

Assets meeting the eligibility criteria of the APP were also eligible under the PEPP.<ref name="Bank-2023">{{Cite journal |date=2023-08-09 |title=FAQ on the pandemic emergency purchase programme |url=https://www.ecb.europa.eu/mopo/implement/pepp/html/ecb.faq_pepp.en.html |access-date=2023-11-30 |website=European Central Bank - Eurosystem}}</ref> However, the pool of assets eligible under the PEPP was broader than the usual ECB collateral eligibility framework.<ref name="Sciorilli Borrelli-2020c" /> For instance, greek sovereign bonds could be purchased by the ECB under this programme, despite having a credit ratings below the usual investment grade requirement.<ref name="Sciorilli Borrelli-2020c" /><ref name="FT-2023b">{{Cite web |title=ECB set to expand bond-buying to soak up debt |url=https://www.ft.com/content/3cf499f7-9c17-46c6-bedd-8893f2d56cf7 |access-date=2023-12-07 |website=Financial Times}}</ref><ref name="Arnold-2020e">{{Cite web |last=Arnold |first=Martin |date=2020-03-19 |title=ECB to launch €750bn bond-buying programme |url=https://www.ft.com/content/711c5df2-695e-11ea-800d-da70cff6e4d3 |access-date=2023-12-04 |website=Financial Times}}</ref> This waiver was given based on several considerations from the ECB: there was a need to alleviate the pressures stemming from the pandemic on the Greek financial markets; Greece was already and would be closely monitored by giving the waiver; and Greece regained market access.<ref name="Boninghausen-2022b">{{cite journal |last1=Böninghausen |first1=Benjamin |last2=Fernández Brennan |first2=León |last3=McCabe |first3=Laura |last4=Schumacher |first4=Julian |title=The pandemic emergency purchase programme – an initial review |journal=ECB Economic Bulletin |issue=8/2022 |page=97 & 98}}</ref> Non-financial commercial paper with a remaining maturity of at least 28 days were also eligible for purchase under the PEPP.<ref name="Bank-2023" /><ref>{{Cite web |last=Ondernemen |first=Agentschap Innoveren & |title=EU Funding Overview |url=https://eufundingoverview.be/ |access-date=2023-11-30 |website=eufundingoverview.be |language=en}}</ref>

On 4 June 2020, the ECB announced<ref>{{Cite journal |date=2020-06-04 |title=Monetary policy decisions |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.mp200604~a307d3429c.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> it would expand the PEPP by another €600 billion,<ref name="Pinto-2023">{{Cite journal |last1=Pinto |first1=João |last2=Costa |first2=Tiago |date=2023-09-26 |title=The Impact of the ECB's PEPP on Euro Area Bond Spreads |url=https://repositorio.ual.pt/bitstream/11144/6572/3/The%20Impact%20of%20the%20ECB%C3%94%C3%87%C3%96s%20PEPP%20on%20Euro%20Area%20Bond%20Spreads_ERBE_II_2.pdf |journal=European Review of Business Economics |volume=11 |issue=2 |pages=62–63 |via=Social Science Research Network}}</ref> as it became clear that the pandemic would continue to harm European economies.<ref name="Runkel-2022" /><ref name="Arnold-2020d" /><ref name="Benigno-2022" /><ref name="Moessner-2022" /> Half a year later, on 10 December 2020, the ECB announced its final expansion of the PEPP worth another €500 billion, totalling the final PEPP to €1.850 trillion,<ref name="Bank-2020a">{{Cite journal |date=2020-12-10 |title=Monetary policy decisions |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.mp201210~8c2778b843.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref><ref name="DB-2023" /><ref name="Alberola-2022" /> corresponding to 15.4% of the euro-area GDP of 2019.<ref name="Wieland-2023">{{Cite journal |last=Wieland |first=Volker |date=2023-07-13 |title=Discussion of "policy packages and policy space: Lessons from COVID-19" by Bergant & Forbes |url=https://www.sciencedirect.com/science/article/pii/S0014292123001654 |journal=European Economic Review |volume=158 |issue=158 |pages=7 |doi=10.1016/j.euroecorev.2023.104536 |s2cid=259942585 |via=Elsevier Science Direct}}</ref>
[[File:PEPP_Graph_Improved.png|thumb|Gross securities purchases by the ECB under the PEPP<ref name="ECB-2023">{{Cite web |date=2023-10-05 |title=Breakdown of cumulative net purchases under the PEPP |url=https://www.ecb.europa.eu/mopo/pdf/PEPP_breakdown_history.csv?6fd58bd8812b585a58b751aebd9a1e4f |access-date=2023-11-10 |website=European Central Bank - Eurosystem}}</ref>]]
In December 2021 the ECB announced that it would discontinue net purchases under the PEPP as from the end of March 2022 and that it intended to reinvest the principal payments from maturing securities at least until the end of 2024.<ref name="Wellink-2023d">{{Cite journal |last=Wellink |first=Nout |date=2023-08-02 |title=Crises have shaped the European Central Bank |journal=Journal of International Money and Finance |volume=138 |pages=7–8 |doi=10.1016/j.jimonfin.2023.102923 |doi-access=free}}</ref><ref>{{Cite journal |date=2020-12-16 |title=Monetary Policy Decisions |url=https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.mp211216~1b6d3a1fd8.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystems}}</ref>

On 31 March 2022, at the end of the net purchases, the net purchases amounted to €1.718 billion, of which €1.665 billion is invested in public sector securities and €52 billion in private sector securities.<ref name="Boninghausen-2022a">{{cite journal |last1=Böninghausen |first1=Benjamin |last2=Fernández Brennan |first2=León |last3=McCabe |first3=Laura |last4=Schumacher |first4=Julian |title=The pandemic emergency purchase programme – an initial review |journal=ECB Economic Bulletin |issue=8/2022 |pages=93–104}}</ref> Of the total €1.850 billion available under the PEPP, 93% of the full envelope wase used, due to indications of decreased financial stress in the Euro Area, mainly thanks to relaxation of COVID restrictions and the reopening of European markets.<ref>{{Cite journal |last1=Birkholz |first1=Carlo |last2=Heinemann |first2=Friedrich |date=2022-06-09 |title=Magnitudes and capital key divergence of the Eurosystem's PSPP/PEPP purchases – updated june 2022 |url=https://www.econstor.eu/bitstream/10419/271651/1/zew-exp202205.pdf |journal=ZEW Expert Brief |issue=5 |pages=5 |via=econstor.eu}}</ref>
{| class="wikitable"
|+Cumulative PEPP purchases in million euros<ref name="ECB-2023" />
!
!Private sector
securities
!Public sector
securities
!Total
securities
!Additional PEPP commitment
by ECB
!Total PEPP
commitment by the ECB
|-
|Mar-May 2020
|           48,062.00
|              186,603.00
|              234,665.00
|              750,000.00
|                    750,000.00
|-
|Jun-Jul
|           55,592.00
|              384,817.00
|              440,409.00
|              600,000.00
|                 1,350,000.00
|-
|Aug-Sep
|           55,534.00
|              511,649.00
|              567,183.00
|                            -  
|                 1,350,000.00
|-
|Oct-Nov
|           48,194.00
|              651,809.00
|              700,003.00
|                            -  
|                 1,350,000.00
|-
|Dec-Jan 2021
|           42,064.00
|              768,148.00
|              810,212.00
|              500,000.00
|                 1,850,000.00
|-
|Feb-Mar
|           43,916.00
|              899,731.00
|              943,647.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           39,696.00
|           1,064,769.00
|           1,104,465.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           42,989.00
|           1,229,199.00
|           1,272,189.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           46,640.00
|           1,365,650.00
|           1,412,290.00
|                            -  
|                 1,850,000.00
|-
|Oct-Nov
|           50,089.00
|           1,498,100.00
|           1,548,189.00
|                            -  
|                 1,850,000.00
|-
|Dec-Jan 2022
|           50,384.00
|           1,597,293.00
|           1,647,677.00
|                            -  
|                 1,850,000.00
|-
|Feb-Mar
|           52,439.00
|           1,665,635.00
|           1,718,075.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           52,441.00
|           1,665,618.00
|           1,718,061.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           52,437.00
|           1,664,913.00
|           1,717,352.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           52,440.00
|           1,660,593.00
|           1,713,035.00
|                            -  
|                 1,850,000.00
|-
|Oct-Nov
|           52,440.00
|           1,660,312.00
|           1,712,753.00
|                            -  
|                 1,850,000.00
|-
|Dec-Jan 2023
|           52,440.00
|           1,661,204.00
|           1,713,645.00
|                            -  
|                 1,850,000.00
|-
|Feb-Mar
|           52,440.00
|           1,661,077.00
|           1,713,518.00
|                            -  
|                 1,850,000.00
|-
|Apr-May
|           52,393.00
|           1,660,634.00
|           1,713,028.00
|                            -  
|                 1,850,000.00
|-
|Jun-Jul
|           52,443.00
|           1,660,307.00
|           1,712,752.00
|                            -  
|                 1,850,000.00
|-
|Aug-Sep
|           52,464.00
|           1,659,969.00
|           1,712,435.00
|                            -  
|                 1,850,000.00
|}

==== Criticism against PEPP ====
Overall, the PEPP programme was widely welcomed by market participants and European policy makers. However in March 2021, a group of German economists and lawyers filed a lawsuit against the PEPP at the [[Federal Constitutional Court|German Federal Constitutional Court]].<ref name="Tesche-2022b" /><ref name="Wellink-2023d" />

===== New TLTRO III and PELTROs =====
On 30 April 2020, the ECB Governing council introduced additional measures to support the economy during the Covid19 pandemic, including PELTROs and new modalities for the TLTROs.

First, the ECB made several adjustments to the framework of its TLTRO III.<ref name="Bank-2020c">{{Cite journal |date=2020-04-30 |title=ECB announces new pandemic emergency longer-term refinancing operations |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200430_1~477f400e39.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> A key change was that the ECB also reduced the interest rate applied to these open market operations to a rate going as low as -1% for the banks meeting the lending threshold of 0%.<ref name="Bank-2020c" /> With the TLTRO III, the participating banks were thus enabled to borrow at lower interest rates than those paid on their excess reserve.<ref name="Castillo Lozoya-2022">{{Cite journal |last1=Castillo Lozoya |first1=M. Carmen |last2=García-Escudero |first2=Enrique Esteban |last3=Pérez Ortiz |first3=Maria Luisa |date=2022-04-07 |title=The Effect of TLTRO III on Spanish Credit Institutions' Balance Sheets |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4101166 |journal=Banco de España |issue=9/22 |pages=3–8 |ssrn=4101166 |via=Social Science Research Network}}</ref>  Another key change was thet ECB's decision to expand bank's borrowing allowance under TLTRO III from 30% to 50%, then up to 55% of their portfolio of loans to firms and households.<ref name="ReferenceA">ECB press release, 10 December 2020.</ref>

Second, the ECB introduced pandemic emergency long-term refinancing operations (PELTROs).<ref name="ECB press release, 30 April 2020">ECB press release, 30 April 2020.</ref> The market operations are similar to the TLTRO III, but are conduced in a more fequent basis in order to ensure smooth liquidity provision to the market.

During the pandemic, these monetary responses proved essential. In their absence, a credit crunch would normally have taken place. Indeed, increase in demand traditionally translates in a rise of borrowing costs.<ref name="Altavilla-2023">{{Cite journal |last1=Altavilla |first1=Carlo |last2=Barbiero |first2=Francesca |last3=Boucinha |first3=Miguel |last4=Burlon |first4=Lorenzo |date=2023-05-13 |title=The Great Lockdown: Pandemic response policies and bank lending conditions |url=https://www.sciencedirect.com/science/article/pii/S0014292123001071 |journal=European Economic Review |volume=156 |pages=6–14 |doi=10.1016/j.euroecorev.2023.104478 |via=Elsevier Science Direct}}</ref> Reports from various member states central banks on the matter indicate that loans supply by participating banks has indeed expanded, in line with the ECB policy.<ref name="Barmeier-2023" /><ref name="Castillo Lozoya-2022" /><ref>{{Cite journal |last1=Kwapil |first1=Claudia |last2=Rieder |first2=Kilian |date=2021-03-11 |title=The effects of the monetary policy response to the COVID-19 pandemic: preliminary evidence from a pilot study using Austrian bank-level data |url=https://www.oenb.at/en/Publications/Economics/Monetary-Policy-and-the-Economy/2021/monetary-policy-and-the-economy-q4-20-q1-21.html |journal=Monetary Policy and the Economy Q4/20-Q1/21 |pages=134 |via=Oesterreichische Nationalbank}}</ref> Accordingly, thorough academic studies have confirmed the actual enhancement of financing conditions and the avoidance of credit scarcity.<ref name="Altavilla-2023" /><ref>{{Cite journal |last1=Dwyer |first1=Gerald |last2=Gilevska |first2=Biljana |last3=Nieto |first3=Maria |last4=Samartín |first4=Margarita |date=1 July 2023 |title=The effects of the ECB's unconventional monetary policies from 2011 to 2018 on banking assets. |url=|journal=Journal of International Financial Markets |pages=28 |doi=10.1016/j.intfin.2023.101800 |doi-access=free }}</ref> In fact, the credit to firms attained unprecedented levels when from March to May 2020, it increased by €250 billion on aggregate.<ref name="Altavilla-2023" /> Furthermore, analysts observed  that even non-participating banks (to the TLTROs and PELTROs) benefited from it in parallel manners.

==== Transmission Protection instrument (TPI) ====
The Transmission Protection Instrument (TPI) is a tool the ECB could use to ensure monetary policy decisions are smoothly transmitted across all euro area countries, introduced on July 21, 2022.<ref name="Bertoldi-2023c"/><ref name="Broeders-2023c">{{Cite journal |last1=Broeders |first1=Dirk |last2=de Haan |first2=Leo |last3=van den End |first3=Jan Willem |date=2023-06-10 |title=How quantitative easing changes the nature of sovereign risk |url=https://www.sciencedirect.com/science/article/pii/S0261560623000827 |journal=Journal of International Money and Finance |volume=137 |pages=3–11 |doi=10.1016/j.jimonfin.2023.102881 |s2cid=259541844 |via=Elsevier Science Direct |hdl-access=free |hdl=1871.1/6bab4cb8-1f5e-4670-8381-374e6a8ed3f3}}</ref><ref name="Arnold-2023c">{{Cite journal |last=Arnold |first=Ivo J.M. |date=2023-09-26 |title=Teaching economics of monetary union with the IS-MP-PC model |url=https://www.sciencedirect.com/science/article/pii/S1477388023000178 |journal=International Review of Economics Education |volume=44 |pages=4–9 |doi=10.1016/j.iree.2023.100276 |via=Elsevier Science Direct}}</ref><ref name="Bank-2022">{{Cite journal |date=2022-07-21 |title=The Transmission Protection Instrument |url=https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.pr220721~973e6e7273.en.html |access-date=2023-12-19 |website=European Central Bank - Eurosystem |last1=Bank |first1=European Central }}</ref><ref name="Lengwiler-2023">{{Cite journal |last1=Lengwiler |first1=Yvan |last2=Orphanides |first2=Athanasios |date=2023-03-21 |title=Collateral Framework: Liquidity Premia and Multiple Equilibria |url=https://onlinelibrary.wiley.com/doi/epdf/10.1111/jmcb.13048 |journal=Journal of Money, Credit and Banking |volume=56 |issue=2–3 |pages=20–21 |doi=10.1111/jmcb.13048 |via=Wiley Online Library|hdl=10419/233209 |hdl-access=free }}</ref> Under the TPI, the ECB would be able to purchase securities in the secondary market, to counter against "unwanted, disorderly market dynamics", self fulfilling crises market expectations that do not reflect reality,<ref name="Sandbu-2022">{{Cite web |last=Sandbu |first=Martin |date=2022-07-21 |title=The ECB reminds everyone who really has the authority |url=https://www.ft.com/content/3f1e6cb3-1a63-412e-bb1f-a8624760fd86 |access-date=2023-12-19 |website=Financial Times}}</ref><ref name="Callegari-2023">{{Cite journal |last1=Callegari |first1=Giovanni |last2=Marimon |first2=Ramon |last3=Wicht |first3=Adrien |last4=Zavalloni |first4=Luca |date=2023-08-05 |title=On a lender of last resort with a central bank and a stability Fund |journal=Review of Economic Dynamics |volume=50 |pages=118 |doi=10.1016/j.red.2023.07.012 |doi-access=free |hdl=10230/59232 |hdl-access=free }}</ref><ref name="Spendzharova-2023">{{Cite journal |last=Spendzharova |first=Aneta |date=2023-08-29 |title=Gouvernement Économique, but Not Like in the 1990s: The Commission and the ECB's Policies Advancing the 'Green Transition' |journal=Journal of Common Market Studies |volume=61 |pages=143 |doi=10.1111/jcms.13541 |doi-access=free }}</ref> thus not justified by "country specific fundamentals."<ref name="Arnold-2023c"/><ref name="Wellink-2023d"/><ref name="Bank-2022" /><ref name="Peychev-2022">{{Cite journal |last=Peychev |first=Anna |date=2022-11-09 |title=Disorder and Discipline: The ECB's Transmission Protection Instrument |url=https://www.europeanpapers.eu/en/europeanforum/disorder-discipline-ecb-transmission-protection-instrument |journal=European Papers |volume=7 |issue=2 |pages=739–747 }}</ref><ref name="Arnold-2022">{{Cite web |last=Arnold |first=Martin |date=2022-07-21 |title=Spread betting: how will the ECB's new bond-buying tool work? |url=https://www.ft.com/content/c5499acd-0271-458d-8363-9e75633399ee |access-date=2023-12-19 |website=Financial Times}}</ref><ref name="FT-2022">{{Cite web |date=2022-07-22 |title=The ECB arms itself against bond market pessimism |url=https://www.ft.com/content/aed7b9f8-87d3-4da4-83af-a476a8c2b850 |access-date=2023-12-19 |website=www.ft.com}}</ref> The TPI thus enables the ECB to control the difference between borrowing costs across the euro area, thereby reducing fragmentation risk across the euro area.<ref name="Broeders-2023c"/><ref name="Arnold-2023c"/><ref name="Sandbu-2022" /><ref name="FT-2022" /><ref name="Grimm-2023">{{Cite journal |last1=Grimm |first1=Veronika |last2=Nöh |first2=Lukas |last3=Wieland |first3=Volker |date=2023-05-31 |title=Government bond rates and interest expenditure of large euro area member states: A scenario analysis |url=https://onlinelibrary.wiley.com/doi/epdf/10.1111/infi.12434 |journal=International Finance |volume=26 |issue=3 |pages=297 |doi=10.1111/infi.12434 |via=Wiley Online Library|hdl=10419/261487 |hdl-access=free }}</ref><ref name="Koranyi-2022">{{Cite news |last1=Koranyi |first1=Balazs |last2=John |first2=Mark |date=2022-07-21 |title=ECB unveils new TPI anti-fragmentation instrument |url=https://www.reuters.com/markets/europe/ecb-unveils-new-tpi-anti-fragmentation-instrument-2022-07-21/ |access-date=2023-12-20 |work=Reuters}}</ref> By not letting interfere market dynamics that do not reflect economic reality, the ECB fulfils its secondary mandate under the TFEU, namely "to support the general economic policies of the Union."<ref name="Arnold-2023c"/><ref name="Sandbu-2022" /> Although PEPP would remain the first line of defence to counter for transmission risks,<ref name="Wellink-2023d"/><ref name="Peychev-2022" /> the TPI should be seen as an addition to the ECB's toolkit.<ref name="Bank-2022" />

===== Eligible securities under the TPI =====
Contrary to the PEPP and the APP, the TPI does not have an ''ex ante'' upper limit on the purchase of securities.<ref name="Bank-2022" /><ref name="Spendzharova-2023" /><ref name="Arnold-2022" /><ref name="Grimm-2023" /><ref>{{Cite web |last1=Arnold |first1=Martin |last2=Johnston |first2=Ian |date=2021-07-21 |title=ECB raises rates for first time in more than a decade |url=https://www.ft.com/content/42b002c0-434e-4688-bdb7-33e0a7c2323f |access-date=2023-12-19 |website=Financial Times}}</ref> Although the ECB has stated it would primarily buy only government bonds on the secondary market<ref name="Spendzharova-2023" /> maturing between 1 and 10 years,<ref name="Arnold-2022" /> the bonds purchased fall under the complete discretion of the ECB and does not necessarily follow the capital key, and private securities could be considered as well.<ref name="Bank-2022" /><ref name="FT-2022" /><ref>{{Cite web |last=Treeck |first=Johanna |date=2023-05-05 |title=ECB needs a new type of bazooka to battle Baltic risk |url=https://www.politico.eu/article/ecb-needs-a-new-type-of-bazooka-to-battle-baltic-risk/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref> However, there are four conditions that need to be met before securities are eligible for purchasing under TPI:<ref name="Grimm-2023" />

# Compliance with the fiscal framework of the EU and not be involved in the [[Stability and Growth Pact|excessive deficit procedure]];
# Absence of macroeconomic imbalances and not being involved in an excessive [[Macroeconomic Imbalance Procedure|macroeconomic imbalance procedure]], demonstrating that it is in compliance with the commission's recommendations;
# Sovereign debt trajectory must be sustainable, assessed by the ECB and other relevant bodies;
# Stick to commitments made under the Recovery and Resilience Facility, proving that the government follows sound and sustainable macroeconomic policies.<ref name="Bank-2022" /><ref name="Peychev-2022" /><ref name="Arnold-2022" /><ref name="Koranyi-2022" /><ref name="POLITICO-2022b">{{Cite web |date=2022-07-21 |title=ECB lifts rates for first time in more than a decade |url=https://www.politico.eu/article/ecb-delivers-50-basis-point-rate-hike-adds-tool-to-its-box/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref>

The conditions for government bonds to be eligible under the TPI draw heavily on the macroeconomic governance, and making sure that politicians do not take decisions that facilitate speculation.<ref name="Sandbu-2022" /><ref name="Martin-2022b">{{Cite web |last=Martin |first=Katie |date=2022-07-22 |title=Markets will test the ECB's resolve |url=https://www.ft.com/content/a9851c45-f2bb-4e00-9a8a-000038308f0e |access-date=2023-12-20 |website=Financial Times}}</ref> The decision by the ECB to support a country by using the TPI will depend on the severity of the risks a country faces.<ref name="Arnold-2022" /><ref name="POLITICO-2022b"/> Government debt should thus be sustainable to be eligible for TPI purchases.<ref name="Callegari-2023" /><ref name="FT-2022" />

If the aforementioned conditions are met, the ECB could decide to activate the TPI.<ref name="Bank-2022" /><ref name="Spendzharova-2023" /><ref name="Arnold-2022" /><ref>{{Cite web |last=Treeck |first=Johanna |date=2022-07-27 |title=Italian central banker plays down chance of big rate hike in September |url=https://www.politico.eu/article/ecb-ignazio-visco-rate-hike-september/ |access-date=2023-12-20 |website=POLITICO |language=en}}</ref> Purchases will be ended under the TPI either due to increased transmission of monetary policy or the risks have proven to be country-specific.<ref name="Wellink-2023d"/><ref name="Bank-2022" /> So far, the TPI has not been deployed yet.

===== Effects of and critiques on the TPI =====
The TPI enables the Governing Council to a more rapid increase in interest rate,<ref name="Broeders-2023c"/><ref name="Wellink-2023d"/> the first raise in interest rates by the ECB in 11 years.<ref name="Bertoldi-2023c"/><ref name="Martin-2022b"/> and the unpredictable nature of market sentiment could justify the reason for ECB-intervention to stabilise the monetary union,<ref name="Arnold-2023c"/> more or less the same reasoning as for the PEPP.

However, the relationship between the PEPP and the TPI raises questions as the PEPP would remain the first line of defence against transmission risks.<ref name="Wellink-2023d" /> The creation of the TPI seems legally vulnerably: problems in the Euro Area are common and recurring, but it is not automatically the argument to invent a whole new anti-fragmentation tool.<ref name="Wellink-2023d" /> With the TPI, the ECB can put pressure on countries by assessing publicly if they are eligible for the TPI, that is assessing whether the government has conducted adequate fiscal policies and structural reforms to deserve the support of the ECB. This endangers the politic neutrality of the ECB.<ref>{{Cite journal |last1=Campoy |first1=Juan Cristóbal |last2=Negrete |first2=Juan Carlos |date=2023-08-18 |title=Quantitative easing rules as a means to achieve optimal levels of structural reforms and government deficits in a monetary union |journal=The World Economy |volume=46 |issue=9 |pages=2775 |doi=10.1111/twec.13460 |doi-access=free }}</ref> If ever deployed, the usage of the TPI will spark controversy as the conditions to be deployed are not watertight.<ref name="Wellink-2023d" /><ref name="POLITICO-2022b"/>

===== Strategy Review (2020-2021) =====
As a consequence of the COVID-19 crisis, the ECB extended the duration of the strategy review until September 2021. On 13 July 2021, the ECB presented the outcomes of the strategy review, with the main following announcements:

* The ECB announced a new inflation target of 2% instead of its "close but below two per cent" inflation target. The ECB also made it clear it could overshoot its target under certain circumstances.<ref name="Amaro-2021">{{Cite web|last=Amaro|first=Silvia|date=2021-07-08|title=European Central Bank sets its inflation target at 2% in new policy review|url=https://www.cnbc.com/2021/07/08/ecb-lagarde-presents-first-policy-review-in-almost-two-decades.html|access-date=2021-07-10|website=CNBC|language=en}}</ref>
* The ECB announced it would try to incorporate the cost of housing (imputed rents) into its inflation measurement
* The ECB announced an action plan on climate change<ref>{{Cite press release|publisher=European Central Bank|date=2021-07-08|title=ECB presents action plan to include climate change considerations in its monetary policy strategy|url=https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210708_1~f104919225.en.html|language=en}}</ref>

The ECB also said it would carry out another strategy review in 2025.