TEXT: ECB Announces EUR50 Bln Pandemic Purchase Programme

     LONDON (MNI) - 18 March 2020

     The Governing Council decided the following:

     (1) To launch a new temporary asset purchase programme of private and

public sector securities to counter the serious risks to the monetary policy

transmission mechanism and the outlook for the euro area posed by the outbreak

and escalating diffusion of the coronavirus, COVID-19.

     This new Pandemic Emergency Purchase Programme (PEPP) will have an overall

envelope of EUR750 billion. Purchases will be conducted until the end of 2020

and will include all the asset categories eligible under the existing asset

purchase programme (APP).

     For the purchases of public sector securities, the benchmark allocation

across jurisdictions will continue to be the capital key of the national central

banks. At the same time, purchases under the new PEPP will be conducted in a

flexible manner. This allows for fluctuations in the distribution of purchase

flows over time, across asset classes and among jurisdictions.

     A waiver of the eligibility requirements for securities issued by the Greek

government will be granted for purchases under PEPP.

     The Governing Council will terminate net asset purchases under PEPP once it

judges that the coronavirus Covid-19 crisis phase is over, but in any case not

before the end of the year.

     (2) To expand the range of eligible assets under the corporate sector

purchase programme (CSPP) to non-financial commercial paper, making all

commercial papers of sufficient credit quality eligible for purchase under CSPP.

     (3) To ease the collateral standards by adjusting the main risk parameters

of the collateral framework. In particular, we will expand the scope of

Additional Credit Claims (ACC) to include claims related to the financing of the

corporate sector. This will ensure that counterparties can continue to make full

use of the Eurosystem's refinancing operations.

     The Governing Council of the ECB is committed to playing its role in

supporting all citizens of the euro area through this extremely challenging

time. To that end, the ECB will ensure that all sectors of the economy can

benefit from supportive financing conditions that enable them to absorb this

shock. This applies equally to families, firms, banks and governments.

     The Governing Council will do everything necessary within its mandate. The

Governing Council is fully prepared to increase the size of its asset purchase

programmes and adjust their composition, by as much as necessary and for as long

as needed. It will explore all options and all contingencies to support the

economy through this shock.

     To the extent that some self-imposed limits might hamper action that the

ECB is required to take in order to fulfil its mandate, the Governing Council

will consider revising them to the extent necessary to make its action

proportionate to the risks that we face. The ECB will not tolerate any risks to

the smooth transmission of its monetary policy in all jurisdictions of the euro

area.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$X$$$,MT$$$$,M$$EC$]