Most of the securities purchased by the European Central Bank (ECB) are public debt of the Member States of the Eurozone. Of the €2.18 trillion that it acquired until last October, 82.75% is public fixed income, according to data from the ECB. 10.84% are covered bonds, 5.6% are private company titles, and the rest are purchase securities, backed by assets.
Public debt bought by the ECB in relation to GDP (Gross Domestic Product)
Source: Own elaboration from the ECB and Eurostat data
In absolute terms, the German public administrations have received the most funding. Specifically, monthly net purchases amounted up to €437,095 million. In second place is France, with 356,106 million in public bonds, Italy and Spain, with 309,691 and 218,310 million, respectively. Now, in relative terms, it is the Spanish public administrations that owe the most to the issuing bank. If you compare net purchases with GDP, the amount owed amounts to 19.5% of this last variable. Next in importance are Italy (18.4%), Portugal (16.2%) and France (16%).
Of the €236,456 million in covered bonds, the ECB has acquired a third in the primary market, and the rest in the secondary. In relation to the €122,265 million corporate debts, 85.44% has been acquired in the secondary market, and in the case of securities backed with assets, 57.11%.
A few weeks ago the ECB decided that starting with January it will buy €30,000 million in public and private debt, half of the amount that it has been buying since March 2015. This small monetary expansion will last at least nine months, and if inflation in the Eurozone does not reach around 2%, the program will continue. In this program, €2.3 trillion have been invested since its inception. The countries of southern Europe have benefited the most, since given their high levels of public debt, they are more dependent on the refinancing by the issuing bank. The restriction in this program can aggravate the economic situation of these countries.
This situation explains why the financial system of our country is the second one that owes more to the Eurosystem, that is, to the group of central banks in the euro zone. Specifically, it owes €373,400 million, just behind Italy, whose debt is 432,500 million. It must be taken into consideration that public debt is used as collateral to borrow from central banks.
Translated by Leila Lunguleac-Bardasuc.