The irony in rulers being confined to their homes

  • Pandemic Emergency Purchase Programme
  • Targeted Longer-term Refinancing Operations (Improved terms)
  • Pandemic Emergency Longer-term Refinancing Operations
  • Too many purchases would be a problem: the ECB has announced purchasing a significant EUR600bn under this programme. It would be critical to determine how much would be sufficient to achieve its main objective, i.e. ,the price stability of securities
  • Non-standardised safeguards: there are no standardised safeguards in place, but the Court of Justice of the European Union (CJEU) insists that the following be adhered to:
  • Not selective: The ECB will not be selective in the PEPP allocation process, and will purchase securities issued by all euro-area countries
  • Eligibility criteria: ECB to follow a stringent and precise process to determine eligibility criteria for security purchases
  • Nature of transaction: ECB needs to make sure that purchases will be temporary in nature
  • Trade limitations: ECB will need to limit the trades by size and risk per issue and issuers
  • A series of seven targeted longer-term refinancing operations
  • Maturity of the operations: three years
  • The borrowing rates of the operation can be as low as 50bps
  • Reduced borrowing rates by 25bps; these can be as low as 25bps, versus 50bps at the launch of TLTRO III
  • An early repayment option will be offered from September 2021
  • Allotment of funds: The ECB’s operations bring in billions of dollars of funds to provide market stability in difficult times. These funds need to be allocated in the most fair and balanced manner among all member countries.
  • Country/bank eligibility: Eligibility to receive funds from ECB operations is mostly determined by the economic requirement and the damage a country has faced amid the pandemic.



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Acuity Knowledge Partners

Acuity Knowledge Partners


We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.