Assessing ECB quantitative easing: one year on: In-depth analysis

The ECB’s expanded asset purchase programme (EAPP) adds the purchase programme for public sector securities to the existing private sector asset purchase programmes to address the risks of a too prolonged period of low inflation. It now consists of a covered bond purchase programme (CBPP3), asset- backed securities purchase programme (ABSPP) and public sector purchase programme (PSPP). However, as the transmission mechanisms of monetary policy remains characterized by long, variable and uncertain time lags, the impact of asset purchases on the real economy continues to be a matter of discussion as confirmed by the slow recovery in bank lending. Some economists even argue that the most effective transmission channel of unconventional monetary policy is the exchange rate. Against this backdrop, the note assesses the effectiveness of the ECB programme of asset purchases one year after its first implementation.