The end of ECB’s intervention

The president of the European Central Bank (ECB) had already announced in June that its asset purchasing program (QE) would end in late 2018. He confirmed this during the last press conference. Unless there is a major economic or financial crisis, giving rise to fears of deflation in the Eurozone , the ECB’s QE program will have been active for 45 months: from March 2015 to December 2018. During this period, the central banks of the Eurozone will have bought € 2.6 trillion in assets, equivalent to 22% of the nominal GDP of the whole area. To put these purchases into perspective, this is comparable in magnitude to the different waves of QE by the US Federal Reserve (the size of the Fed’s balance sheet went from 6% of US GDP in 2008 to 25% in 2015). The ECB’s asset portfolio is made up of 84% public debt, 8% bank debt, 7% corporate debt and 1% ABS. The average maturity of public securities purchased is 7.5 years. France, Italy and the Netherlands are close to this average; Germany is below (6.4) and Spain above (8.3). Finally, it is interesting to note that the ECB will reinvest the full amount of assets maturing for an indefinite period. In 2019, this will represent gross purchases of around 15-20 billion euros per month. Purchases will hence not be fully stopped, but will be greatly reduced.