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What is the pandemic emergency purchase programme (PEPP)?

28 July 2021

The coronavirus pandemic hurt economies across the globe. Many businesses had to shut their doors due to restrictions. People lost their jobs and the outlook for the future was highly uncertain. To counter the impact on the euro area economy, the European Central Bank started the pandemic emergency purchase programme, or PEPP, in March 2020.

The PEPP helps people and firms to get access to affordable funds they need to weather the crisis. This temporary programme complements our other monetary policy measures, such as the other asset purchase programmes and our targeted lending operations.

But how precisely does the PEPP work?

The PEPP allows the ECB to purchase different types of assets in financial markets. By doing this, the prices of those assets go up and, by extension, market interest rates go down. All of this supports the economy by making borrowing cheaper for people, businesses and governments. It also makes it easy for borrowers to service their debts. This helps to maintain borrowing, spending and investment despite the pandemic crisis. Ultimately, it will boost growth and bring inflation back to our target of 2% over the medium term, i.e. in line with price stability.

This graphic shows how this process generally works.

Overall, the PEPP has been created to manage the coronavirus pandemic and the uncertainty about when and where its fallout will be worst. It has successfully stabilised financial markets and prevented the turbulence in the spring of 2020 from turning into a full-blown financial crisis with even more serious consequences for Europeans.

Compared to our other asset purchase programmes, the PEPP is special for the following reasons:

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It is flexible

This is the PEPP’s most important feature. It means we are flexible when we buy, what kind of assets we buy, and in which countries we buy. This allows us to focus our purchases so that they preserve favourable financing conditions for people in the euro area. And, importantly, to respond rapidly to any financial or economic changes.

It is scalable

We initially allocated €750 billion for PEPP asset purchases. This was increased by another €600 billion in June 2020 and again by €500 billion in December 2020, for a new total of €1.85 trillion. However, the total amount can be raised or lowered as required to maintain favourable financing conditions.

It is transparent

We publish a lot of data about asset purchases to make the programme as transparent as possible. Every week we publish the amount of securities we have purchased under the PEPP and the APP. We also publish our monthly net purchases. In addition, every two months we give out more detailed information about public and private sector purchases under the PEPP.

It is temporary

The PEPP is specifically intended to counter the impact of the coronavirus crisis on the euro area economy. We will conduct net asset purchases until at least the end of March 2022 and, in any case, until the Governing Council judges that the crisis is over.

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Monetary policy instruments

Pandemic emergency purchase programme (PEPP)