ECB: Impact of securities purchases on M3 money supply partially neutralised - BNPP

Analysts at BNP Paribas note that the European Central Bank (ECB) has purchased EUR 1,931 billion in public-sector securities at February 2018, post the beginning of its securities purchase programme in March 2015.

Key Quotes

“According to our calculations, a large part of these purchases were made with resident banks (no impact on M3) and non-resident agents.”

“At the same time, there was a shift in demand from resident agents towards issues from the rest of the world. ECB purchases of QE-eligible securities from non-residents and subscriptions by other resident agents of non-resident issues led to a partial substitution of the counterparty “MFIs (including Eurosystem) Credit to General government” to the counterparty “MFIs Net external assets”. This shows that the direct or book impact of QE on the eurozone’s money supply was partially neutralised.”