Three central banks that use the euro will experiment this month with reverse auctions in the European Central Bank’s large-scale bond-buying program, the ECB said Monday.
“The aim is to gain experience with the use of reverse auctions in carrying out asset purchases in government, agency and supranational securities” in the ECB’s programme of buying public-sector assets “without prejudging in any way whether the Eurosystem would consider applying auctions more systematically in asset purchase programmes in the future, ” the ECB said in a release.
The Eurosystem refers to the European Central Bank and the national central banks of the 19 countries that use the euro. The banks that will start using the reverse auctions are the central banks of France, the Netherlands and Lithuania.
“The trials also do not imply a change in any of the current parameters of the” quantitative-easing program, the release said. “The reverse auction trials target a very small part of the overall monthly purchases and take place alongside regular purchases.”
Under the ECB’s QE programme, it is purchasing EUR60 billion a month of mostly government bonds. The programme started in March and is due to go until September of next year, though central-bank officials have said they are prepared to extend the program beyond that date should inflation not get rise closer to the ECB’s medium-term target of just below 2%.
Source: MarketWatch
