Editing European Central Bank (section)

===== 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.