FAQ on the pandemic emergency purchase programme
Updated on 8 January 2025
Q1 When did you start and end purchases under the PEPP?
On 18 March 2020, the Governing Council announced the pandemic emergency purchase programme (PEPP) (see the Governing Council’s monetary policy decisions of 18 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) pandemic. The Eurosystem started conducting purchases under the PEPP on 26 March 2020.
On 16 December 2021, the Governing Council decided to discontinue net asset purchases under the PEPP at the end of March 2022. At the same time, it also announced its intention to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2024.
On 14 December 2023, the Governing Council announced that it would continue to reinvest, in full, the principal payments from maturing securities purchased under the PEPP until the end of June 2024 and that, over the second half of the year, it intends to reduce the PEPP portfolio by €7.5 billion per month on average (this was subsequently confirmed on 6 June 2024). The Governing Council also announced its intention to discontinue reinvestments under the PEPP at the end of 2024.
On 12 December 2024, the Governing Council has decided to confirm the full discontinuation of reinvestments under the PEPP at the end of 2024.
Q2 How did you distribute the purchase volumes across the APP and the PEPP?
During the net purchase phase of APP and PEPP, the purchase volumes under the PEPP were separate from and in addition to the purchases conducted under the APP. The calibration of the purchase volumes under each programme was governed by the specific objectives assigned to these programmes.
On 15 June 2023, the Governing Council announced that it would discontinue reinvestments under the APP as of July 2023 (see FAQ on the public sector purchase programme).
On 12 December 2024, the Governing Council has decided to discontinue reinvestments under the PEPP at the end of 2024.
Q3 Were the assets eligible for purchase under the PEPP the same as under the APP?
The PEPP included all the asset categories eligible under the asset purchase programme (APP). In addition, the PEPP included a waiver of the eligibility requirements for securities issued by the Greek Government. For public sector asset purchases under the PEPP, the minimum eligible remaining maturity was reduced to 70 days, while the maximum eligible remaining maturity for public sector asset purchases under the PEPP was set at 30 years and 364 days, in line with the public sector purchase programme PSPP. Moreover, the eligibility of non-financial commercial paper under the corporate sector purchase programme (CSPP) was expanded to include securities with a remaining maturity of at least 28 days. These securities could be purchased under both the CSPP and the PEPP. Previously, only commercial paper with a remaining maturity of at least six months had been eligible for purchase under the CSPP.
Q4 Could asset managers and non-bank financial institutions offer eligible securities for purchase under the APP and PEPP?
Asset managers and non-bank financial institutions were not eligible counterparties and therefore could not directly sell securities to the Eurosystem under the APP and PEPP. However, under the APP and PEPP, the Eurosystem offered its eligible counterparties the possibility of sharing offers of eligible securities on behalf of non-eligible counterparties, such as asset managers and non-bank financial institutions. Although final responsibility for the offered assets remained entirely with the eligible counterparties, they could include them in the daily inventories of assets that they shared with the Eurosystem, either by explicitly reporting which assets were offered on behalf of non-eligible counterparties or aggregating them with their inventories. In periods of heightened investor uncertainty, such as during the COVID-19 pandemic, this option contributed to alleviating market tensions and supporting proper market functioning.
Q5 What was the distribution between the share of public sector purchases and private sector purchases in the PEPP?
The Eurosystem purchased eligible securities under the PEPP in a flexible and appropriate manner to foster smooth market functioning and counter risks to the monetary policy transmission mechanism. Therefore, when net purchases under the PEPP were being conducted there was no pre-defined distribution across asset classes. Instead, purchases were carried out flexibly to achieve monetary policy objectives.
The breakdown between public and private sector purchases that were conducted under the PEPP is published on the ECB website.
Q6 Are the PEPP holdings risk shared?
The same risk-sharing principles apply for the PEPP as for the APP. This means private sector securities that were purchased under the PEPP are fully risk shared while, for public sector purchases, the ECB’s share of purchases, as well as purchases of securities of European institutions, are subject to risk sharing. This implies that 20% of public sector asset purchases under the PEPP are subject to risk sharing. The rest of the national central banks’ holdings of public sector securities under PEPP are not subject to risk sharing.
Q7 Were the rating requirements for the PEPP the same as for the APP?
Yes. The only exception was the eligibility of Greek Government bonds in PEPP under the respective waiver, until the Hellenic Republic was upgraded to investment grade, (i.e. Credit Quality Step 3 in the Eurosystem's harmonised rating scale) by an external credit assessment institution (ECAI) accepted within the Eurosystem credit assessment framework. After this upgrade, Greek government bonds became eligible for purchase in APP and remained eligible in PEPP, but without the need for a waiver.
Q8 What maturity range applied to the securities you bought in the PEPP?
The residual maturity of public sector securities purchased under the PEPP ranged from 70 days up to 30 years and 364 days. For private sector securities eligible under the CSPP, debt instruments had to have either (i) an initial maturity of 365/366 days or less and a minimum remaining maturity of 28 days at the time they were bought, or (ii) an initial maturity of 366/367 days or more, a minimum remaining maturity of six months and a maximum remaining maturity of less than 31 years (i.e. purchases of securities with a remaining maturity of up to 30 years and 364 days were possible) at the time they were bought. For ABSPP and CBPP3-eligible securities, no maturity restrictions applied.
Q9 Did you have target volumes of purchases under the PEPP?
The PEPP had an overall envelope of €1,850 billion which was not used in full. The Eurosystem applied a flexible purchase approach based on market conditions and with a view to preventing a tightening of financing conditions that was inconsistent with countering the downward impact of the pandemic on the projected path of inflation. If favourable financing conditions could be maintained with asset purchase flows that did not exhaust the envelope over the net purchase horizon of the PEPP, the envelope did not need to be used in full.
Q10 Are the securities purchased under the PEPP also available for securities lending?
Yes. The same conditions apply for securities lending transactions under the PEPP as under the APP.
Q11 What kind of data do you publish regarding the PEPP?
During the period where purchases under PEPP were made, the aggregate book value of securities held under the PEPP was published on a weekly basis. PEPP monthly net purchases and cumulative net purchases were published on a monthly basis.
Following the discontinuation of reinvestments under the PEPP, the Eurosystem made a number of important changes, effective from January 2025, to the PEPP data it publishes in order to align this with its publication of APP data. First, it will publish the jurisdictional composition of public sector cumulative net purchases and information on the weighted average maturity of public sector holdings on a monthly instead of the previous bi-monthly basis, and it will also publish the historical data for these monthly PEPP series. Second, it will publish both backward- and forward-looking redemption data for the PEPP. Third, it will discontinue the publication of the primary/secondary market breakdown data for PEPP’s private programmes to align this with recent changes in the publication of data on the APP’s private sector programmes.
Q12 Were “green” criteria included in the PEPP?
The eligibility criteria for the PEPP were the same as under the programmes that constitute the APP, namely the public sector purchase programme (PSPP), the corporate sector purchase programme (CSPP), the third covered bond purchase programme (CBPP3) and the asset-backed securities purchase programme (ABSPP).
Q13 How were PEPP redemptions in public sector securities reinvested during normal times?
From the beginning of the PEPP until the end of 2021, redemptions of government and agency securities were reinvested in the jurisdiction in which the principal repayments were made and in the month they fell due. For redemptions of bonds issued by EU supranational institutions, reinvestments were conducted across eligible EU supranational issuers in the month they fell due. A smoothing mechanism was not necessary given the low volumes of redemptions at the time.
Starting in 2022, unless market conditions required otherwise, reinvestments in public sector securities were smoothed across jurisdictions and across time. The “double-smoothing” mechanism was designed to ensure market presence in all euro area countries over time, thereby supporting market functioning. The need for a smoothing of reinvestments by country over a calendar year arose from the fact that redemptions were typically unevenly distributed over time and concentrated in only a few months of the year. As the Eurosystem conducts purchases across the euro area, it is essential that we factor these country-level redemption patterns into the implementation approach. This smoothing mechanism had the potential to lead to temporary deviations of the PEPP holdings from the ECB capital key allocation, but these would tend to reverse by the end of the smoothing period, which was the calendar year in which the redemptions took place. More details on the dynamics of PEPP reinvestments and how the smoothing mechanism worked in practice can be found in this ECB blog post.
Q14 How flexible were reinvestments in public sector securities?
Within our mandate, under stressed conditions, flexibility was an element of monetary policy implementation whenever threats to monetary policy transmission could have jeopardised the attainment of price stability. In December 2021, the Governing Council announced that “in the event of renewed market fragmentation related to the pandemic, PEPP reinvestments can be adjusted flexibly across time, asset classes and jurisdictions at any time.”