Securities Markets Program

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Government bond purchases by the European Central Bank as part of the SMP.

The program for the securities markets (English Securities Markets Program , abbreviated to SMP) was a bond purchase program on the secondary market carried out by the European Central Bank (ECB) between May 2010 and September 2012. It was used to buy government bonds and corporate bonds . The purpose was to provide banks in the euro zone with sufficient liquidity and to enable monetary policy measures to achieve medium-term price stability . The Governing Council established the purchase program as a means of combating disruptions in the monetary policy transmission mechanism.

The SMP was discontinued with immediate effect in September 2012 with the resolution of the OMT (Outright Monetary Transactions) program .

course

On May 9, 2010, in a coordinated action with several EU countries that decided on the first 750 billion euro rescue program this weekend, the SMP gave itself the opportunity to buy government and corporate bonds on the secondary market with immediate effect . The SMP was continuously maintained from its implementation until September 2012. Two periods of strong bond purchases can be identified: On the one hand, the period from May to the beginning of July 2010 (around 60 billion euros) and the period between the beginning of August 2011 and mid-January 2012 (around 140 billion euros) (see graphic). The total volume of the purchase program was around 210 billion euros. The transactions were basically sterilized - that is, the central bank withdrew from the market the liquidity gained through the purchases through other so-called fine - tuning operations with the aim of eliminating the risk of inflation. The amount of bond purchases was advertised weekly, but not their composition. This was only communicated selectively after the end of the program; As of December 31, 2012, Italian paper accounted for almost half of the total volume (nominal 218 billion euros, book value 208.7 billion euros), followed by Spanish (20%) and Greek (16%).

As of January 31, 2014, the portfolio of securities purchased as part of the program was just under EUR 176 billion. Monetary policy sterilization ended in mid-2014.

Legal evaluation

Sester (2012) assesses the SMP in particular with regard to the risks of a violation of Art. 125 (1) of the Treaty on the Functioning of the European Union (TFEU). Sester affirms the risk of such a breach because the not only theoretical possibility exists that the issuers of the securities bought will not be able to make the interest payments without restructuring measures (“ haircut ”). According to Article 33 (1) of the ESCB Statute, the resulting losses are then initially financed through the general reserve fund of the ECB. If this is not enough, currency reserves would again have to be used and if this is not enough, the member states of the monetary union would have to recapitalize the ECB. In the case of voluntary debt restructuring, Sester believes that this can be seen as indirect responsibility for the liabilities of member states within the meaning of Art. 125 TFEU.

Herrmann (2012), in his assessment of the German legal situation, advocates a wide margin of appreciation for the ECB. The liability of national central banks within the meaning of Article 33 (1) of the ESCB Statute for liabilities of the ECB that exceed the reserve fund and the reserves of the ECB is not automatically triggered because a transfer to the national central banks with the help of a - legally unnecessary - An increase in the ECB's capital is only possible indirectly. According to Art. 28 Para. 1 i. V. m. Art. 10 para. 3 ESCB Statute a qualified majority in the Governing Council, although this must first be authorized to do so. Herrmann denies in this constellation a direct budgetary obligation of the federal government, because the federal government “has no institutional burden or any other guarantor liability” and he “generally has no legal entitlement to the generation of profits by the Bundesbank [...]”.

Tuori (2014) expresses strong doubts about the constitutional conformity of the SMP. He points out that there is an important difference between using government bonds as collateral or directly holding these bonds, because if they are used as collateral, a loss only occurs when both the underlying value becomes worthless and the debtor no longer receives it can arise, while with immediate hold the loss occurs as soon as the value of the bond declines. Tuori sees this as a task of the constitutionally provided independence of the ECB, because as a lender of a member country of the euro zone it is directly dependent on its fiscal problems.

In its ESM judgment, the German Federal Constitutional Court pointed out that the "acquisition of government bonds on the secondary market by the European Central Bank, which aimed to finance the budgets of the member states independently of the capital markets [...] would be a circumvention of the ban on monetary budget financing" ( Art. 123 para. 1 TFEU) must be assessed. In its statement on behalf of the Federal Constitutional Court, the Ifo Institute for Economic Research had previously indicated that the SMP meant not only a direct, but even a direct form of state financing, because the SMP had created the prerequisite for the crisis countries "without interest rate increases" were able to accommodate new papers on the market.

See also

literature

Remarks

  1. ^ "Monetary policy glossary" of the European Central Bank
  2. ↑ a b Program for the Securities Markets. Deutsche Bundesbank, accessed on June 7, 2017 .
  3. ^ Claudia A. Szalay: The ECB intervenes unrestrained. In: Neue Zürcher Zeitung. May 11, 2010, No. 107, p. 25.
  4. ^ European Central Bank: Summary of ad hoc communication. Related to monetary policy implementation issued by the ECB since January 1, 2007. Online , accessed September 7, 2012.
  5. ↑ The sterilization of the purchases does not always succeed completely, since the success of the suggestion depends on the interests of the commercial banks. This in turn fluctuates with the daily rates on the money market. See Claudia A. Szalay: The sterilization does not always succeed. In: Neue Zürcher Zeitung. April 8, 2011, No. 83, p. 27.
  6. ↑ European Central Bank: February 21, 2013 - Details on securities holdings acquired under the Securities Markets Program. Press release. Online , accessed March 21, 2013.
  7. ↑ European Central Bank: Open-market operations: Ad-hoc communications. Retrieved February 7, 2014 Summary of ad hoc communication .
  8. ^ Peter Sester: The ECB's Controversial Securities Market Program (SMP) and its role in relation to the modified EFSF and the future ESM. In: European Company and Financial Law Review. 9, No. 2, July 2012, pp. 156-178, doi : 10.1515 / ecfr-2012-0156 .
  9. ↑ Christoph Herrmann: Coping with the euro sovereign debt crisis at the limits of German and European monetary constitutional law. In: European Journal of Business Law. 21, 2012, pp. 805-812.
  10. ↑ Klaus Tuori: Enlarged Scope and Competences of the ECB. Economic Constitutional Analysis. Helsinki Legal Studies Research Paper No. 25, 2013, Internet http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2275206 , accessed June 1, 2014.
  11. ↑ BVerfG, ruling v. September 12, 2012 - 2 BvR 1390/12 (= NJW 2012, 3145, 3156) [Rn. 278].
  12. ↑ Ifo Institute for Economic Research: Responsibility of States and Central Banks in the Euro Crisis . Expert opinion on behalf of the Federal Constitutional Court, Second Senate. Constitutional complaints 2 BvR 1390/12, 2 BvR 1439/12 and 2 BvR 1824/12, Organstreit proceedings 2 BvE 6/12. June 11, 2013, Internet http://www.cesifo-group.de/Sinn-Juni2013_EZB-Kurs (PDF file), accessed on June 1, 2014.