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ECB bought €285 mn of Cypriot bonds

08/12/2015 12:53
The European Central Bank (ECB) bought €285 mn worth of Cypriot government bonds until 30 November, under the Public Sector Purchase Programme (PSPP) on secondary markets, which became effective since March 2015.

Also, according to data released by the ECB, the Eurosystem bought Cypriot government bonds worth €97 mn in November.

Moreover, from March when purchases under the PSPP program begun, until December 4th 2015, the ECB bought bonds of eurozone states of a total value of €461,91 bn. In the week ending December 4 alone, the Eurosystem purchased government bonds worth €11,29 bn. euros.

Furthermore, the ECB proceeded to the purchase of asset backed securities totaling €15,33 bn. until December 4th and to the purchase of covered bonds worth €139,92 bn.

The Eurosystem purchased Cypriot government bonds for the first time under the PSPP, in July 2015.

The inclusion of the Cypriot government bonds in the extended purchase program is expected to keep having direct benefits for Cyprus, mainly through further reduction of borrowing costs for Cyprus and indirectly through enhancing confidence towards the Cypriot economy generally and towards the domestic banking system specifically.

Purchases are conducted on the secondary market from mainly Cypriot government bondholders, ie banks and investment funds, which are willing to sell some of their investments in Cypriot government bonds.

At the meeting of the ECB Governing Council in December the quantitative easing program was decided to be extended by six months, until March 2017. The aim of the ECB President Mario Draghi is to increase, through the bond purchase program, the ECB’s balance sheet by € 1.1 trillion and to address the risk posed by the prolonged period of very low inflation in the Eurozone.