On Thursday, the European Central Bank (ECB) announced a EUR 750 billion “Pandemic Emergency Purchase Program (PEPP)” to help combat the economic consequences of the coronavirus crisis.

PEPP is a new bond purchase program for all categories of securities already eligible in the existing asset purchase program (APP) of the ECB. The program will include a new temporary purchase of public and private sector securities to counter the risks to the monetary policy transmission mechanism and the outlook for the euro area. In addition a waiver of the requirements for purchasing securities issued by the Greek government will be granted for purchases under PEPP.

The acquisition will be performed at least until the end of the year. In this context, the ECB made clear that it will only terminate the net purchases of assets under the PEPP when it considers that the corona-crisis has been overcome.

In addition, the ECB will expand the range of eligible assets under the corporate sector purchase program (CSPP) to non-financial commercial paper, making all commercial papers of sufficient credit quality eligible for purchase under CSPP and ease the collateral requirements by adjusting the main risk parameters of the collateral framework. With regard to the Additional Credit Claims (ACC) the scope shall be expanded to include claims related to the financing of the corporate sector to ensure that counterparties can continue to benefit fully from the Eurosystem’s refinancing operations.

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