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7/21, 4:01 PM (Source: TeleTrader)
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ECB: TPI to focus on public sector securities

The European Central Bank stated on Thursday that its newly adopted Transmission Protection Instrument (TPI) will focus on public sector securities with a remaining maturity of between one and ten years, although private sector securities "could be considered, if appropriate." The ECB will focus on "jurisdictions experiencing a deterioration in financing conditions not warranted by country-specific fundamentals" and take into account a number of criteria when deciding whether the jurisdictions "pursue sound and sustainable fiscal and macroeconomic policies."

"Purchases would be terminated either upon a durable improvement in transmission, or based on an assessment that persistent tensions are due to country fundamentals," the ECB explained. "Purchases under the TPI would be conducted such that they cause no persistent impact on the overall Eurosystem balance sheet and hence on the monetary policy stance."

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