Monetary Policy

Pandemic Emergency Purchase Programme (PEPP)

The European Central Bank’s pandemic emergency purchase programme (PEPP) is a non-standard monetary policy measure announced and initiated in March 2020 to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus (COVID-19) outbreak.

The PEPP is a temporary asset purchase programme of private and public sector securities. The Governing Council decided to increase the initial €750 billion envelope for the PEPP by €600 billion on 4 June 2020 and by €500 billion on 10 December 2020, for a new total of €1,850 billion. All asset categories eligible under the existing asset purchase programme are also eligible under the new programme. Under the PEPP, a waiver of the eligibility requirements is granted for securities issued by the Greek Government. In addition, non-financial commercial paper is now eligible for purchases both under the PEPP and the corporate sector purchase programme. The residual maturity of public sector securities eligible for purchase under the PEPP ranges from 70 days up to a maximum of 30 years and 364 days.

For the purchases of public sector securities under the PEPP, the benchmark allocation across jurisdictions will be the capital key of the national central banks. At the same time, purchases will be conducted in a flexible manner on the basis of market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation. This allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.

On 16 December 2021, the Governing Council decided to discontinue the net asset purchases under the PEPP at the end of March 2022. The maturing principal payments from securities purchased under the PEPP will be reinvested until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary stance.

The Central Bank of Malta also participates in the PEPP by purchasing eligible Malta Government Securities from eligible counterparties.