APP net asset purchases were conducted until the end of December 2018, involving a total amount of €2.6 trillion. The APP comprises the third covered bond purchase programme (CBPP3, launched on 20 October 2014), the asset-backed securities purchase programme (ABSPP, launched on 21 November 2014), the public sector purchase programme (PSPP, launched on 9 March 2015) and the corporate sector purchase programme (CSPP, launched on 8 June 2016). The APP, in combination with negative interest rates on the deposit facility, forward guidance and TLTROs, has helped the ECB meet its price stability objective. The room for further interest rate cuts had become very limited after monetary conditions were eased in the wake of the financial and sovereign debt crises by cutting key interest rates and deploying unprecedented measures to support monetary policy transmission. The APP is part of a package of policy measures that was initiated in mid-2014 to support the monetary policy transmission mechanism and provide the amount of policy accommodation needed to ensure price stability.
Whereas net asset purchases have come to an end, principal payments from maturing securities purchased under the APP will continue to be reinvested as this, together with enhanced forward guidance, provides the monetary accommodation that the Governing Council judges to be required for the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. From an implementation viewpoint, the Eurosystem ensured that asset purchases were conducted smoothly and flexibly by striving for market neutrality and mitigating unintended side effects for market functioning. The APP has been part of a package of policy measures together with negative interest rates on the deposit facility, forward guidance and targeted longer-term refinancing operations (TLTROs), jointly creating synergies that have enhanced the effectiveness of each of the package’s individual components. The APP has proved to be an adaptable and effective instrument to ease monetary and financial conditions, foster economic recovery, counteract disinflationary pressures and anchor inflation expectations, thereby supporting a sustained adjustment in the path of inflation towards price stability. Prepared by Felix Hammermann, Kieran Leonard, Stefano Nardelli and Julian von Landesbergerįollowing the Governing Council’s decision in December 2018 to end net asset purchases under the Eurosystem’s asset purchase programme (APP), this article reviews the implementation and effects of the asset purchases. Taking stock of the Eurosystem’s asset purchase programme after the end of net asset purchases
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