The presence of the European Central Bank in the Greek bond market will continue until the end of 2023, regardless of what will be decided for the emergency bond market program of the pandemic (PEPP).
According to ECB Governing Board member Philip Lane in an interview with Reuters, the ECB will reinvest the bonds in its portfolio under the PΕPP program, which expire at least by the end of 2023.
“Consequently, there will be a sufficient presence of the ECB in the Greek bond market through the pandemic program (PEPP), regardless of what will happen with the regular program of buying bonds APP (Asset Purchase Program)” as he stated characteristically.
Greek bonds participate in the PEPP program but not in the APP program, as Greece does not have the required creditworthiness.
In general, as the ECB official explains, ensuring favorable financial markets favors the bond market as a whole, and the benefit is not limited to bonds purchased by the Central Bank.
According to Mr. Lane, the participation of Greek bonds in the pandemic program was quite an important development, as the risk of recession was quite high due to the crisis caused. In this context, the PEPP program worked effectively.
He declined to comment on whether the ECB plans to increase the APP program after the pandemic program is completed in March 2022.