Blog post

An update: Sovereign bond holdings in the euro area – the impact of QE

Since the ECB’s announcement of its QE programme in January 2015, national central banks have been buying government and national agency bonds. In thi

Publishing date
22 November 2016

In this blog, we provide an update of our calculations first published in May this year , which allows us to gauge the impact of QE on sovereign bond holdings in the euro area.

By the end of October 2016, the ECB has bought 1148 billion euros of bonds under its public sector purchase program (PSPP), of which 129 billion were supranational bonds and 1019 billion were national government and agency bonds. Purchases of asset-backed securities reached 21 billion euros by the end of October, while holdings under the third covered bond purchase programme (CBPP3) amounted to 198 billion euros (see here for breakdowns). Starting in June 2016, the ECB also added a corporate sector purchase programme (CSPP), which now stands at 38 billion.

As previously discussed, the implementation of this 85 billion euros of purchases is split between the ECB and the national central banks. This is reflected in Figure 1, which shows an increasing trend in central banks’ sovereign bond holdings since the start of the PSPP.

More interestingly, as a percent of the total outstanding debt, this increase has been offset by decreases in sovereign holdings of other institutional sectors. Table 1 shows the percentage point change of sovereign debt holdings between end-2015 and mid-2016. Our updated figures show that the central bank purchases have been offset by decreases in resident banks’ holdings, much to the benefit of a decreased sovereign-bond dependency. Such changes played a minor role in the other countries. In France and Germany, most of the increase in central bank holdings was offset by a decrease in non-resident holdings, which includes all holdings which are not domestic. In Italy, other residents such as households and corporates are decreasing their sovereign bond holdings, a trend which cannot be observed in any other country.

In conclusion, our most recent data update confirms the trend already highlighted in our post from May this year. It appears that in most countries the ECB’s purchases have not yet helped reverse the marked increase in banks’ holdings of domestic government debt which happened during the crisis. However, with the updated figures, we can see that Spain is a positive exception. December might bring a change in US monetary policy, with possible changes in investors’ preferences around the world, so we will keep monitoring this closely.

About the authors

  • Silvia Merler

    Silvia Merler, an Italian citizen, is the Head of ESG and Policy Research at Algebris Investments.

    She joined Bruegel as Affiliate fellow at Bruegel in August 2013. Her main research interests include international macro and financial economics, central banking and EU institutions and policy making.

    Before joining Bruegel, she worked as Economic Analyst in DG Economic and Financial Affairs of the European Commission (ECFIN). There she focused on macro-financial stability as well as financial assistance and stability mechanisms, in particular on the European Stability Mechanism (ESM), providing supportive analysis for the policy negotiations.


  • Pia Hüttl

    Pia Hüttl is an Austrian citizen and joined Bruegel as an Affiliate Fellow in 2015. Her research interests include macroeconomics, financial economics and monetary policy as well as European political economy.

    Prior to this, Pia worked as Research Assistant for Bruegel, and as a Trainee in the Monetary Policy Division of the European Central Bank. Also, she worked as a Blue Book Stagiaire in the Monetary policy, Exchange rate policy of the euro area, ERM II and Euro adoption Unit in DG Ecfin of the European Commission.

    She holds a Bachelor's degree in European Economics and a Master's degree in International Economics from the University of Rome Tor Vergata. She also obtained a Master's degree in European Political Economy from the London School of Economics, with a thesis on Current Account imbalances in the Euro area and the role of financial integration.

    Pia is currently pursuing a PhD in Economics at the Humboldt University in Berlin.

    She is fluent in German, Italian and English, and has good notions of French.

    Declaration of interests 2015

    Declaration of interests 2016

    Declaration of interests 2017

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