Policy brief

European Central Bank quantitative easing: the detailed manual

This Policy Contribution examines the detail of how quantitative easing will actually take place in the euro area and its implications, following

Publishing date
11 March 2015
  • The European quantitative easing programme, the Public Sector Purchase Programme (PSPP), started on 9 March 2015 and will last at least until September 2016. Purchases will be composed of sovereign bonds and securities from European institutions and national agencies.
  • The European Central Bank Governing Council imposed limits to ensure that the Eurosystem will not breach the prohibition on monetary financing. However, these limits will constrain the size and duration of the programme, especially if it is sustained after September 2016. The possibility for national central banks to also buy national agency securities could alleviate this, but the small number of eligible agencies could limit their role as a back-up purchase.
  • The Eurosystem should find other eligible agencies, especially in countries in which public debt is small, or waive the limits for countries respecting the investment grade eligibility criteria. The same issue arises with European institutions: their number and outstanding debt securities are limited. The waiver of the limits proposed for sovereigns should be applied to institutions with high ratings.
  • The PSPP profits that will ultimately be repatriated to national treasuries will be small. This was to be expected, given current very low yields. Profits will also come from the major increase in reserves resulting from the implementation of QE, combined with the negative deposit rates on excess reserves at the ECB.

About the authors

  • Grégory Claeys

    Grégory Claeys, a French and Spanish citizen, joined Bruegel as a research fellow in February 2014, before being appointed senior fellow in April 2020.

    Grégory Claeys is currently on leave for public service, serving as Director of the Economics Department of France Stratégie, the think tank and policy planning institution of the French government, since November 2023.

    Grégory’s research interests include international macroeconomics and finance, central banking and European governance. From 2006 to 2009 Grégory worked as a macroeconomist in the Economic Research Department of the French bank Crédit Agricole. Prior to joining Bruegel he also conducted research in several capacities, including as a visiting researcher in the Financial Research Department of the Central Bank of Chile in Santiago, and in the Economic Department of the French Embassy in Chicago. Grégory is also an Associate Professor at the Conservatoire National des Arts et Métiers in Paris where he is teaching macroeconomics in the Master of Finance. He previously taught undergraduate macroeconomics at Sciences Po in Paris.

    He holds a PhD in Economics from the European University Institute (Florence), an MSc in economics from Paris X University and an MSc in management from HEC (Paris).

    Grégory is fluent in English, French and Spanish.

     

  • Alvaro Leandro

    Álvaro Leandro Fernández-Gil, a Portuguese and Spanish citizen, worked at Bruegel as a Research Assistant from November 2014 until July 2016 in the area of Global and European Macroeconomics. Prior to this, Álvaro worked as a Research Assistant at “la Caixa” Research. He has also worked as an intern at the Sustainable Development Network of the World Bank. He holds an undergraduate degree in Economics from the University of Sussex, and a master in Specialised Economic Analysis from the Barcelona Graduate School of Economics (Universitat Pompeu Fabra).

    The subject of his Master's thesis was the inter-connectivity in the financial system, and its consequences for systemic risk and regulation. At the University of Sussex he wrote a dissertation on Political Business Cycles.

    Álvaro’s research interests include Macroeconomics, International Finance and Political Economy.

    He is fluent in English, French, Portuguese and Spanish.

  • Allison Mandra

    Allison Mandra is from the United States. She was an intern at Bruegel from November 2014 until June 2015. She obtained her Master’s in Macroeconomic Policy and Financial Markets from the Barcelona Graduate School of Economics, where she wrote a thesis on whether financial analysts’ price targets for public equities are concordant with the use of rational expectations in asset-pricing models.

    She holds a Bachelor’s degree in Economics from Bates College in the United States, and wrote her undergraduate thesis on the instabilities and inequities of the current international reserve system, including an analysis of proposed avenues for reform. During her studies she also spent a semester at Cambridge University focusing on theories of industrial organization.

    Allison’s research interests include macroeconomics and international financial stability.

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