ECB has never acquired so little debt from Portugal

  • ECO News
  • 3 May 2017

The ECB has once again stopped their purchases of Portuguese debt in April. It set a new minimum in the acquisition of securities, at a little over 500 million euros.

The European Central Bank (ECB) has once again dropped their purchases of the Portuguese debt in April, while the acquisitions of national bonds were cut in half in comparison to the historic average of the assets purchase programme in the public sector, which began in December, 2015.

The institution headed by Mario Draghi only purchased 526 million euros in bonds from the Portuguese Treasury last month, an amount which is comparable to the 1,000 million euros in debt the ECB has been purchasing, on average, every month since the beginning of the quantitative easing. Those purchases were one third of ECB’s goal, which was 1,400 million, calculated based on Portugal’s ECB capital key.

This decrease has been going on for the past few months, in accordance with the fewer availability of Portuguese debt securities in the market, and now, according to ECB’s lower aggressiveness in the secondary market (the new monthly acquisition goal went from 80 billion to 60 billion in bonds from the Euro Area).

All in all, the institution set in Frankfurt already has a total of 27 billion euros worth of Portuguese bonds.

Last month, the Portuguese Vítor Constâncio, ECB’s vice-president, has associated this reduction in the purchase rhythm with the purchases already made in 2010 and 2011, which is why the bank has been less proactive now.

The governments’ debt acquisition programme was created in the end of 2015 as a part of ECB’s plan to spark up the Euro Area economy, in a time when the inflation rate was dangerously travelling close to the deflation line. Although Mario Draghi has acknowledged he might extend those incentives, this less conventional plan of having the monetary policy strengthen economic activities ends in December 2017.