Since June 2016, the European Central Bank (ECB) has acquired nearly €113 billion worth of bonds in private non-banking companies in the framework of the corporate sector purchase programme (CSPP), its president, Mario Draghi, announced on Monday 25 September.
“So far, close to €110 billion of corporate bonds from around 200 issuers, in 20 countries, across all sectors, have been purchased”, Draghi said. He observed that as a result of this programme, financing conditions had improved, not only for the private companies whose bonds had been acquired, but also for other companies that have not qualified for the programme.
Under pressure from a group of around 40 MEPs who fear financing being diverted away from companies in a system likely to bring about competition distortion through monetary policy, the Governing Council of the European institution agreed to provide more transparency over the nature of the corporate bonds acquired under the CSPP programme (see EUROPE 11800).
Calling for the ECB to invest less in companies that use fossil fuels, Molly Scott Cato (Greens/EFA, UK) asked Draghi what the ECB does to take account of environmental sustainability requirements in these acquisitions. The ECB president said that the eligibility criteria under the programme were broad enough to include environmental protection companies as well.
According to its website, the ECB has invested in bonds issued by, amongst others, the groups Shell, Daimler and Aurotoutes du Sud de la France.
Bernd Lucke, member of the far-right Alternativ für Deutschland party (ECR, Germany) questioned the former governor of the Bank of Italy regarding the existence of a limit in the purchase volumes under the CSPP, arguing that this type of monetary operation does not comply with the treaties. Draghi went no farther than to comment that there was a maximum limit for the ECB to hold bonds issued by a single company.
QE. Nor did the ECB president say anything about a phasing-out of the quantitative easing programme for the mass purchase of mainly public securities. The Governing Council will make its main decisions in this area on Thursday 26 October, he said (see EUROPE 11857).
Draghi said that he welcomes the revision of the European financial supervisory architecture presented by the European Commission last week. It is because this architecture was shored up after the crisis of 2008, with the creation of the three European supervisory authorities (ESMA, EBA and EIOPA), that the accommodative ECB policy has been able to run for so long, he explained.
On the burgeoning economic recovery of the eurozone, Draghi repeated the ECB's growth forecasts: 2.2% of GDP in 2017, 1.8% in 2018 and 1.7% in 2019. As for inflation, this is expected to remain moderate, standing at 1.5% in 2017, 1.2% in 2018 and 1.5% in 2019. (Original version in French by Mathieu Bion)