Asset Purchase Programmes in the Asia-Pacific Region during COVID-19: Design and Impact

Asset purchase programmes (APPs) were implemented by central banks in a number of countries as the COVID-19 pandemic took hold in March and April 2020. These programmes sought to purchase assets that had come under selling pressure as market participants perceived the various securities’ risks as rising alongside uncertainty about the economic implications of the pandemic. This study examines their use by central banks in the Asia-Pacific region with the objective of examining their design, implementation and impact. Overall, the eight countries chosen for this study were successful in accomplishing their stated goals: to keep yields on government debt low, lower the yield volatility and ameliorate dysfunction in these (and related markets), and attempt to ensure the continuation of monetary policy transmission. The study places these countries’ APP use within the general context of their pre-COVID-19 economic and financial conditions. Fortunately, these countries were in a relatively comfortable position, which supported a successful APP implementation. The study additionally provides guidance on two elements which appear key to the current (and possible future) success of APPs — communication strategies and exits. The possible strategies for the repeated use, implications, and ultimate wind-down of APPs is an important topic in the region, particularly because the use of APPs are likely to influence central banks’ perceived independence and their ability to carry out their monetary policy and financial stability mandates.