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CAPITAL MARKETS

Monetary policy: ECB gets bang for 60 billion bucks

No to quantitative easing; End of repo facility eyed?

billion euros: the volume of covered bond issuance since the ECB announcement

Rarely during this crisis has so (relatively) little got such a positive response. The European Central Bank’s decision to embark on unconventional measures to meet its policy objectives had been very much anticipated. For several weeks economists and the press had speculated on how and whether the ECB would follow the UK and US monetary authorities by quantitatively easing. Amid signs that the central bank was deeply split ahead of the contentious May decision, there was an unexpected announcement that it would purchase €60 billion of covered bonds instead. Other than the total, the only information the ECB gave was that it was offering support for covered bonds from the euro area. "The €60 billion from the ECB is not that small if you compare it to last year’s covered bond issuance, which was just under €90 billion," says Lars Humble, syndicate at Goldman Sachs.

That said, the total size of the covered bond market – as defined by the ECB – is €1.2

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