Decision (EU) 2015/774 (ECB/2015/10) established a secondary markets public sector asset purchase programme (PSPP). Alongside the third covered bond purchase programme, the asset-backed securities purchase programme and the corporate sector purchase programme, the PSPP is part of the expanded asset purchase programme (APP) of the European Central Bank (ECB). The APP aims to enhance the transmission of monetary policy, facilitate the provision of credit to the euro area economy, ease borrowing conditions for households and firms, and support the sustained convergence of inflation rates to levels below, but close to, 2 % over the medium term, consistent with the ECB’s primary objective of maintaining price stability.

On 13 December 2018, the Governing Council decided that certain parameters of the APP should be adjusted as from 1 January 2019 in order to achieve the APP’s objectives. More specifically, the Governing Council decided to halt net asset purchases under the APP on 31 December 2018. The Governing Council confirmed its intention that principal payments from maturing securities purchased under the APP should continue to be reinvested in full for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

The Governing Council also decided that, the allocation of cumulative net purchases of marketable debt securities issued by eligible central, regional or local governments and recognised agencies under the PSPP across eligible jurisdictions should continue to be guided, on a stock basis, by the respective national central banks’ subscription to the ECB’s capital as referred to in Article 29 of the Statute of the ESCB.

On 12 September 2019, the Governing Council decided to restart net purchases under the APP as from 1 November 2019 and expects them to be carried out for as long as necessary to reinforce the accommodative impact of policy rates and to end shortly before the Governing Council starts raising the key ECB interest rates. The Governing Council also decided to continue reinvesting in full the principal payments from maturing securities purchased under the APP for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. In light of a protracted slowdown in the euro area economy, persistent downside risks to the growth outlook and an inflation outlook that continued to fall short of its medium-term inflation aim, the Governing Council concluded that a comprehensive policy response was warranted to support the return of inflation to a sustained convergence path towards the Governing Council’s medium-term inflation aim. Resuming net asset purchases is a proportionate measure as it has a greater impact on longer-term rates than interest rate policy and eases the relevant funding costs of firms and households.

The PSPP, as part of the asset purchase programmes constituting the APP, is a proportionate measure for mitigating the risks to the outlook on price developments, as these programmes further ease monetary and financial conditions, including those relevant to the borrowing conditions of euro area non-financial corporations and households, thereby supporting aggregate consumption and investment spending in the euro area and ultimately contributing to a return of inflation rates to levels below, but close to, 2 % over the medium term. In an environment where key ECB interest rates are close to their lower bound, it is necessary to include in the Eurosystem's monetary policy measures asset purchase programmes as instruments that feature a high transmission potential to the real economy.

The PSPP contains a number of safeguards to ensure that the envisaged purchases are proportionate to its aims, and that the related financial risks have been duly taken into account in its design and will be contained through risk management. To allow for the smooth operation of markets in eligible marketable debt securities, and to avoid obstructing orderly debt restructurings, thresholds will apply to the purchases of those securities by the Eurosystem central banks.

The PSPP complies fully with the obligations of the Eurosystem central banks under the Treaties, including the monetary financing prohibition, and does not impair the operation of the Eurosystem in accordance with the principle of an open market economy with free competition.

With a view to ensuring the effectiveness of the PSPP, the Eurosystem hereby clarifies that it accepts the same (pari passu) treatment as private investors as regards the marketable debt securities that the Eurosystem may purchase under the PSPP, in accordance with the terms of such instruments.

The PSPP is implemented in a decentralised manner, giving due regard to market price formation and market functioning considerations, and coordinated by the ECB, thereby safeguarding the singleness of the Eurosystem's monetary policy.

On 26 March 2019, the Governing Council decided to further harmonise the concepts of agency currently used in the Eurosystem monetary policy framework and to align the criteria used to define recognised agencies in the collateral framework and agencies eligible for the PSPP,