European Central Bank Tools and Policy Actions B: Asset Purchase Programs
Yale Program on Financial Stability Case Study 2015-2B-V1
27 Pages Posted: 26 Jan 2016 Last revised: 4 Mar 2016
Date Written: July 15, 2015
Beginning in August 2007, the European Central Bank (ECB) used standard and non-standard monetary policies as the global financial markets progressed from initial turmoil to a widespread sovereign debt crisis. This case describes the key features of the ECB’s asset purchase programs throughout the Global Financial Crisis and subsequent European sovereign debt crisis. These programs include the Covered Bond Purchase Programs (CBPP1, CBPP2, CBPP3), Securities Markets Program (SMP), Outright Monetary Transactions (OMT), Asset-backed Securities Purchase Program (ABSPP) and the Public Sector Purchase Program (PSPP).
In combating the crises, the ECB designed various innovative programs which it successively employed as the crises progressed. While some programs proved highly effective, others were less so. A major program, the OMT, was challenged in court and ultimately found to be within the ECB’s legal operating framework.
Keywords: Financial Crises, Financial Regulation, Asset Purchase
JEL Classification: G01, G28
Suggested Citation: Suggested Citation