The @ecb published the Decision on the Pandemic Emergency Purchase Programme (PEPP) today: eur-lex.europa.eu/legal-content/…. Spoiler: the APP issuer/issue limits WILL NOT apply to the PEPP. A short thread. 1/x @fwred @MehreenKhn @AGelpern @henrikenderlein @MarijnvdSluis @Smits1Rene
1x The PSPP issuer/issue limit (which limited purchases to 33% of a single Member State's debt instrument) will NOT apply to the PEPP: "To ensure the effectiveness of this decision, the consolidated holdings under Article 5 of the PSPP Decision should not apply to PEPP holdings."
2/x The ECB distinguishes the PEPP's objectives from those of other bond-buying programmes: "the PEPP requires a high degree of flexibility in its design and implementation compared with the APP and its monetary policy objectives are not identical to that of the APP."
3/x In contrast to the PSPP (and akin to OMT), the ECB will target the shorter end of the yield curve to reduce roll-over risks: "public sector marketable debt securities with maturities shorter than those purchased under the PSPP will also be purchased under the PEPP."
4/x The ECB (unsurprisingly) will keep the pari passu pledge: "The Eurosystem hereby clarifies that it accepts the same (pari passu) treatment as private investors as regards the public sector marketable debt securities that the Eurosystem may purchase under the PEPP..."
5/x Like the @federalreserve , the ECB will also buy non-financial commercial paper under the PEPP: "the Governing Council decided to expand the range of eligible assets under the corporate sector purchase programme to non-financial commercial papers..."
