ECB: Additional support in Greece if necessary – Liquidity in the Eurozone will be ensured

LAST UPDATE 17:15

The Russian invasion of Ukraine is a critical turning point for Europe, the European Central Bank said in a statement issued on Friday.

The Board of Directors of the Central Bank “expresses its full support to the people of Ukraine” and stresses that “it will ensure smooth liquidity conditions and will implement the sanctions decided by the European Union and the European governments”.

At the same time, it emphasizes that it will do whatever it takes “to fulfill the ECB ‘s mandate to ensure price stability and safeguard financial stability”.

Finally in the APP in the third quarter

In this context, the ECB has decided to revise its market plan in Asset Purchase Program (APP) for the coming months. As announced, the monthly net purchases under the APP will reach € 40 billion in April, € 30 billion in May and € 20 billion in June.

“The formation of net markets for the third quarter will depend on the data and will reflect the ongoing assessment of the outlook by the Board.” The ECB adds that, if the medium-term outlook for inflation does not deteriorate, the Governing Council will complete its net purchases under the APP program in the third quarter“.

The central bank, however, leaves a window to continue shopping, saying it remains ready to “revise its net purchases program in terms of size and / or duration, depending on inflation developments.”

At the same time, he confirms that he will stop the net purchases within him Pandemic Emergency Shopping Program (PEPP) at the end of March 2022.

At the same time, the ECB reiterates the special reference to Greece, stressing that it will continue to be flexible. “This could include the purchase of bonds issued by the Hellenic Republic in addition to the value of the bonds reinvested at maturity, in order to avoid interruption of purchases in that country, which could adversely affect the transmission of monetary policy to the “Greek economy, while it is still recovering from the effects of the pandemic”, the ECB states in the text of the decisions.

The Board kept interest rates unchanged, announcing that the interest rates on major refinancing operations as well as the marginal lending facility and the deposit facility would remain unchanged at 0.00%, 0.25% and -0.50% respectively.

The central bank slightly changed its assessment of interest rates, noting that “any adjustments to key ECB interest rates will be made some time after the end of the net purchases of the Board of Directors under the APP program and they will be gradual. ”

The ECB has previously said that net purchases in the APP will expire shortly before it starts raising its key interest rates.

Refinancing operations

The Governing Council of the ECB also states that it will continue to monitor the financing conditions of banks and ensure that the maturity of operations under the third series of targeted longer-term refinancing operations (TLTRO III) does not impede the smooth transmission of its monetary policy.

The Board of Directors will also regularly review the way in which targeted lending operations contribute to the direction of its monetary policy.

Liquidity lines with central banks

Due to the extremely uncertain environment created by Russia’s invasion of Ukraine and the risk of regional side effects that could adversely affect euro area financial markets, the ECB has decided to extend the repurchase agreement of Eurosystem EUREP) until 15 January 2023.

Finally, the ECB notes that requests from central banks outside the euro area for individual euro liquidity agreements will be assessed on a case-by-case basis.

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