ECB’s Visco: Higher Asset Buys to Continue Until End-June, But We Remain Flexible

31 March 2021

By David Barwick – FRANKFURT (Econostream) – Accelerated asset purchases by the European Central Bank will continue until the end of June, though the ECB will continue to carry out its purchases with flexibility, Governing Council member Ignazio Visco said on Wednesday.

According to the Report of the Governor to the Ordinary Meeting of Shareholders of Banca d’Italia, which he heads, Visco said that ‘[t]he start of vaccination campaigns in Italy and the rest of the world leads to cautious optimism for the future.’

‘However, there is still great uncertainty about the evolution of the health crisis and, consequently, about the prospects for the economy’, he said.

The Eurosystem would ‘continue to act decisively as long as necessary’, he vowed.

Turning to the ECB’s pandemic emergency purchase programme (PEPP), Visco said that ‘[a]t its meeting on 11 March, the Governing Council decided, on the basis of a joint assessment of financing conditions and the inflation outlook, to significantly increase the pace of purchases under the programme compared with earlier in the year and until the end of June, although interventions will continue to be conducted in a flexible manner according to market conditions.’

Reinvestment of capital from maturing assets purchased under the ECB’s asset purchase programme (APP) would ‘continue as long as necessary and in any case for an extended period of time’ according to the report.

In addition, the ECB’s targeted refinancing operations would ‘continue to play an important role in supporting banks' liquidity’, he said.

Reflecting the Eurosystem’s policy measures, Banca d’Italia’s balance sheet has expanded by nearly 150% since end-2014, Visco said, ‘due to the extraordinary increase in banks' long-term refinancing operations and purchases of government securities and private bonds for monetary policy purposes.’

Net profit of Banca d’Italia in 2020 was €6.3 billion, €2 billion less than in 2019, he said.