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The impact of the Eurosystem's covered bond purchase programme on the primary and secondary markets

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  • Beirne, John
  • Dalitz, Lars
  • Ejsing, Jacob
  • Grothe, Magdalena
  • Manganelli, Simone
  • Monar, Fernando
  • Sahel, Benjamin
  • Sušec, Matjaž
  • Tapking, Jens
  • Vong, Tana

Abstract

This paper provides an assessment of the impact of the covered bond purchase programme (hereafter referred to as the CBPP) relative to its policy objectives. The analysis presented on the impact of the CBPP on both the primary and secondary bond markets indicates that the Programme has been an effective policy instrument. It has contributed to: (i) a decline in money market term rates, (ii) an easing of funding conditions for credit institutions and enterprises, (iii) encouraging credit institutions to maintain and expand their lending to clients, and (iv) improving market liquidity in important segments of the private debt securities market. The paper also provides an overview of the investment strategy of the the Eurosystem with regard to the CBPP portfolio. JEL Classification: E22, L63, L86, O3, O47

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Bibliographic Info

Paper provided by European Central Bank in its series Occasional Paper Series with number 122.

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Date of creation: Jan 2011
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Handle: RePEc:ecb:ecbops:20110122

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Keywords: covered bonds; liquidity; primary market; secondary market;

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References

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  1. Holm-Hadulla, Fédéric & Kamath, Kishore & Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2010. "Public wages in the euro area - towards securing stability and competitiveness," Occasional Paper Series 112, European Central Bank.
  2. Bussière, M. & Pérez-Barreiro, E. & Straub, R. & Taglioni, D., 2011. "Protectionist Responses to the Crisis: Global Trends and Implications," Working papers 319, Banque de France.
  3. Vergote, Olivier & Studener, Werner & Efthymiadis, Ioannis & Merriman, Niall, 2010. "Main drivers of the ECB financial accounts and ECB financial strength over the first 11 years," Occasional Paper Series 111, European Central Bank.
  4. Stolz, Stéphanie Marie & Wedow, Michael, 2010. "Extraordinary measures in extraordinary times: Public measures in support of the financial sector in the EU and the United States," Discussion Paper Series 1: Economic Studies 2010,13, Deutsche Bundesbank, Research Centre.
  5. Sturm, Michael & Sauter, Nicolas, 2010. "The impact of the global financial turmoil and recession on Mediterranean countries’ economies," Occasional Paper Series 118, European Central Bank.
  6. Gardó, Sándor & Martin, Reiner, 2010. "The impact of the global economic and financial crisis on central, eastern and south-eastern Europe: A stock-taking exercise," Occasional Paper Series 114, European Central Bank.
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Cited by:
  1. Martina Cecioni & Giuseppe Ferrero & Alessandro Secchi, 2011. "Unconventional Monetary Policy in Theory and in Practice," Questioni di Economia e Finanza (Occasional Papers) 102, Bank of Italy, Economic Research and International Relations Area.
  2. Kartik Anand & James Chapman & Prasanna Gai, 2012. "Covered bonds, core markets, and financial stability," SFB 649 Discussion Papers SFB649DP2012-065, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  3. Urszula Szczerbowicz, 2012. "The ECB Unconventional Monetary Policies: Have They Lowered Market Borrowing Costs for Banks and Governments?," Working Papers 2012-36, CEPII research center.
  4. Nuno Cassola & Alain Durré & Cornelia Holthausen, 2011. "Implementing monetary policy in the crisis times - the case of the ECB," Chapters, European Central Bank.
  5. Matteo Falagiarda & Stefan Reitz, 2013. "Announcements of ECB Unconventional Programs: Implications for the Sovereign Risk of Italy," Kiel Working Papers 1866, Kiel Institute for the World Economy.
  6. Jérôme Creel & Mathilde Viennot & Paul Hubert, 2013. "Assessing the Interest Rate and Bank Lending Channels of ECB Monetary Policies," Sciences Po publications 2013-25, Sciences Po.
  7. Jakob de Haan & Willem van den End & Jon Frost & Christiaan Pattipeilohy & Mostafa Tabbae, 2013. "Unconventional Monetary Policy of the ECB during the Financial Crisis: An Assessment and New Evidence," SUERF 50th Anniversary Volume Chapters, SUERF - The European Money and Finance Forum.
  8. Kristóf Lehmann & Róbert Mátrai & György Pulai, 2013. "Measures taken by the Federal Reserve System and the European Central Bank during the crisis," MNB Bulletin, Magyar Nemzeti Bank (the central bank of Hungary), vol. 8(Special), pages 98-107, October.
  9. Eser, Fabian & Carmona Amaro, Marta & Iacobelli, Stefano & Rubens, Marc, 2012. "The use of the Eurosystem's monetary policy instruments and operational framework since 2009," Occasional Paper Series 135, European Central Bank.
  10. Yunus Aksoy & Henrique S. Basso, 2012. "Liquidity, term spreads and monetary policy," Banco de Espa�a Working Papers 1223, Banco de Espa�a.
  11. Drudi, Francesco & Durré, Alain & Mongelli, Francesco Paolo, 2012. "The interplay of economic reforms and monetary policy: the case of the euro area," Working Paper Series 1467, European Central Bank.
  12. Kristóf Lehmann, 2012. "International experiences with unconventional central bank instruments," MNB Bulletin, Magyar Nemzeti Bank (the central bank of Hungary), vol. 7(2), pages 24-30, June.
  13. Fawley, Brett W. & Neely, Christopher J., 2013. "Four stories of quantitative easing," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 51-88.
  14. Ewald Nowotny, 2012. "Der Euro - Vergangenheit, Gegenwart, Zukunft," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 38(2), pages 273-284.
  15. Zaghini, Andrea, 2014. "Bank bonds: Size, systemic relevance and the sovereign," CFS Working Paper Series 454, Center for Financial Studies (CFS).

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