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November 24, 2017 at 08:34 PM
The European Central Bank is assessing a key element of its stimulus plan that looks likely to gain in prominence next year.
The ECB is reviewing its corporate-bond buying program, according to euro-area officials familiar with the matter. The study by the Market Operations Committee is largely looking at the effectiveness of the strategy, which has spent 126 billion euros ($148 billion) so far, and how it influences the supply of credit to the euro-area economy.
At the same time, policy makers have discussed whether the benefits are skewed toward large firms and their shareholders, the officials said, asking not to be named as the is confidential. The ECB said in an emailed statement that it is “constantly monitoring the impact of its asset-purchase programs.”
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The evaluation comes as the ECB prepares to decide how to implement the slowdown in quantitative easing that will start in January. With the total program set to surpass 2.5 trillion euros by September, and some nations facing a shortage of the sovereign debt which makes up the bulk of purchases, the proportion allocated to corporate bonds could rise. President Mario Draghi said last month that buying of private-sector securities will remain “ sizable.”
The corporate-sector purchase program was a late addition to QE, starting in June 2016 as the central bank stepped up its drive to revive inflation. Buying of government and agency debt began in March 2015 and purchases of covered bonds and asset-backed securities began as smaller initiatives in 2014.
Debt Usage
The ECB currently buys 60 billion euros a month of debt, of which about 50 billion euros is from the public sector and 7 billion euros is corporate. Covered bonds and asset-backed securities make up the rest.
