ECB Launches €750 Billion Emergency Asset Purchase Program: "Will Do Everything Possible"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The European Central Bank (ECB) announced on the 18th (local time) that it will implement a 750 billion euro (approximately 1,037 trillion KRW) 'Pandemic Emergency Purchase Programme (PEPP)'.

In a statement released that day, the ECB announced the launch of a new temporary asset purchase program for the private and public sectors. The ECB explained, "This is a measure to prevent serious risks to the monetary policy transmission mechanism and the outlook within the European region in relation to the accelerating outbreak and spread of COVID-19 in the region."

The PEPP, amounting to 750 billion euros, is scheduled to operate until the end of 2020 and includes all types of assets covered by the Asset Purchase Programme (APP) that has been in operation since November last year. The ECB stated that it will stop net asset purchases under the PEPP once it judges the COVID-19 crisis phase to be over, but it does not plan to stop before the end of this year.

Alongside this, the ECB decided to expand the eligible asset range of the Corporate Sector Purchase Programme (CSPP), which purchases corporate bonds including non-financial commercial paper (CP), to include all types of CP with good credit ratings.

The ECB pledged, "We commit to doing our part to support all citizens in the European region facing extremely difficult times," adding, "The ECB will ensure that all sectors of the economy benefit from the financing environment provided to absorb the shock." It also added that this support will be applied equally to households, companies, banks, and governments.

Furthermore, the ECB emphasized that it is fully prepared to take all necessary measures within its authority and to expand the scale and adjust the composition of the asset purchase programs whenever needed. It also added, "We will consider all options and all scenarios to provide economic support in response to this shock."