Monetary Policy

Asset Purchase Programme (APP)

In recent years, the Governing Council adopted a range of non-standard monetary policy measures, including asset purchases, aimed at addressing the risks of deflation and at bringing inflation back up to its target. 

The expanded asset purchase programme consists of the Public Sector Purchase Programme (PSPP), the Covered Bonds Purchase Programme (CBPP3), the Asset Backed Securities Purchase Programme (ABSPP) and the Corporate Sector Purchase Programme (CSPP). Through asset purchases, the Eurosystem influences financial conditions in the economy as a whole, lowering funding costs for firms and households and stimulating consumption and investment. In turn, more dynamic aggregate demand should help push up inflation. The Governing Council decides upon the parameters of the APP, including monthly purchase volumes.

The PSPP commenced on 9 March 2015 and is by far the biggest of the four programmes. Under the PSPP, Eurosystem members purchase eligible bonds issued by euro area central or regional governments, certain agencies and certain international or supranational institutions located in the euro area. The Central Bank of Malta participates in the APP through the PSPP, purchasing eligible Malta Government Stocks (MGS) from eligible counterparties.  

Reverse auctions under the Public Sector Purchase Programme

The Central Bank of Malta may use reverse auctions alongside bilateral purchases to buy selected Malta Government debt securities eligible for the PSPP.

Auctions by the Bank will be held as announced on the Bank's website. The list of targeted bonds will be published on this page two days prior to the auction. Eligible counterparties can participate in these PSPP reverse auctions.

Information published on this page also includes terms and conditions, timeline and FAQs.

The Central Bank of Malta's announcement of Reverse Auctions including the list of relevant securities can be found here.

The Central Bank of Malta will publish the results after each auction.

Securities lending

On 2 April 2015, the Governing Council of the ECB decided that bonds acquired by Eurosystem members under the PSPP should be made available for lending in a decentralised manner, unless jurisdiction specific conditions justify otherwise. The aim of securities lending is to support bond and repo market liquidity without disrupting normal repo market activity. On 8 December 2016, the Governing Council of the ECB decided that Eurosystem central banks will have the possibility to also accept cash as collateral in their PSPP securities lending facilities. 

In the context of the securities lending programme, the ISINs of such bonds are published on the websites of the respective national central banks on a weekly basis. Moreover, those Eurosystem members that make their PSPP-eligible Securities Markets Programme (SMP) bond holdings available for lending publish the list of the ISINs of the SMP securities concerned on their respective websites.

As there is no market demand for borrowing of MGS, the Central Bank of Malta does not make its MGS holdings available for lending. Nevertheless, the Bank holds a number of PSPP-eligible SMP securities in its monetary policy portfolio which are available for repo activity through its bilateral agreements with its counterparties. Accordingly, the Bank started to post a list of the ISINs of the related bonds on its website as from 8 April 2015.

PSPP-eligible SMP Securities Available for Lending held by the Central Bank of Malta