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Sliding Down the Slippery Slope? Trends in the Rules and Country Allocations of the Eurosystem’s PSPP and PEPP

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  • Annika Havlik
  • Friedrich Heinemann

Abstract

The Eurosystem has become one of the crucial players in the market for euro area government bonds. After first substantive purchases through the Securities Market Programme (SMP) in 2010, the Eurosystem’s involvement has reached a new breadth and magnitude with the establishment of the Public Sector Purchase Programme (PSPP) in 2015. On top of this, the ECB Council has set up the Pandemic Emergency Purchase Programme (PEPP) in March 2020 in order to stabilize the euro area economy in the crisis and to contain the rise of sovereign risk premia.This study analyzes trends in the rules, volumes and country allocations of the two active sovereign purchase programmes, the PSPP and the PEPP. For an economic assessment, it is of importance to which extent the purchase programmes are of an asymmetric nature and whether the Eurosystem increasingly accepts the role of a strategic creditor who has veto power in debt negotiations.

Suggested Citation

  • Annika Havlik & Friedrich Heinemann, 2020. "Sliding Down the Slippery Slope? Trends in the Rules and Country Allocations of the Eurosystem’s PSPP and PEPP," EconPol Policy Reports 21, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpr:_21
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    File URL: https://www.ifo.de/DocDL/EconPol_Policy_Report_21_PSPP_PEPP.pdf
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    Cited by:

    1. Arne Hansen & Dirk Meyer, 2020. "The PSPP Government Bond Program – Empirical Data and Regulations Partially Question the Federal Constitutional Court’s Decision," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(10), pages 37-46, October.
    2. Lars P. Feld & Martin Beznoska & Oliver Holtemöller & Hans-Peter Burghof & Ulrike Neyer & Clemens Fuest & Friedrich Heinemann & Thomas König, 2020. "Record Debts to Combat Covid-19 Consequences – What Can the State Afford?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(08), pages 03-32, August.
    3. Havlik, Annika & Heinemann, Friedrich & Helbig, Samuel & Nover, Justus, 2022. "Dispelling the shadow of fiscal dominance? Fiscal and monetary announcement effects for euro area sovereign spreads in the corona pandemic," Journal of International Money and Finance, Elsevier, vol. 122(C).
    4. Friedrich Heinemann, 2021. "The political economy of euro area sovereign debt restructuring," Constitutional Political Economy, Springer, vol. 32(4), pages 502-522, December.
    5. Vasiliki Dimakopoulou & George Economides & Apostolis Philippopoulos & Vanghelis Vassilatos, 2023. "Can Central Banks Do the Unpleasant Job That Governments Should Do?," CESifo Working Paper Series 10603, CESifo.
    6. Dimakopoulou, Vasiliki & Economides, George & Philippopoulos, Apostolis, 2022. "The ECB's policy, the Recovery Fund and the importance of trust and fiscal corrections: The case of Greece," Economic Modelling, Elsevier, vol. 112(C).
    7. Simon Loretz & Hans Pitlik & Margit Schratzenstaller, 2021. "Bundeshaushalt und Staatsschuld in der COVID-19-Krise. Bundesvoranschlag 2021 und Mittelfristiger Finanzrahmen 2021 bis 2024," WIFO Monatsberichte (monthly reports), WIFO, vol. 94(1), pages 53-65, January.
    8. Vasiliki Dimakopoulou & George Economides & Apostolis Philippopoulos, 2021. "The ECB's Policy, the Recovery Fund and the Importance of Trust: The Case of Greece," CESifo Working Paper Series 9371, CESifo.

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