Editing European Central Bank (section)

===== 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
|}