Date: 24th March 2020

Last Wednesday, the European Central Bank (ECB)  announced a 750 billion asset-purchase programme in response to the coronavirus outbreak, causing a boost of the euro against the dollar and the pound.

  • This new temporary asset purchase programme of private and public sector securities counters the serious risks to the monetary policy transmission mechanism and the offset the impact that the outbreak and escalating diffusion of COVID-19 is having on global and financial markets.


  • The new Pandemic Emergency Purchase Programme (PEPP) will have an overall envelope of €750 billion. Purchases will be conducted until the end of 2020, it will include all the asset categories eligible under the existing asset purchase programme (APP) and will also consider the debt of Greece.


There have been mixed reactions following the announcement.

Axa Investment Managers welcomed the stimulus. The firm’s chief economist Gilles Moec said: “The euro has caught up with the US. Both legs of economic policy, monetary and fiscal, are now providing massive support.”

Takuya Kanda, general manager of the research department at Research Institute in Tokyo, was also optimistic about this new implementations: “The euro is being bought because the ECB, which had previously been seen as somewhat reluctant to move, has come out with something very bold,”

However, at NN Investment Partners the mood is somewhat different. According to the asset manager, the package falls short of a “large and lasting” response, calling the message from the central bank “vague”.

What is clear is that, whether these new measures will work or not in the long.-run, depends a lot on how this epidemic will be handled in the following weeks and whether the cases of new infections will begin to fall.


Mr. Kanda agrees with the later by adding: "Unless the number of new virus cases starts to fall, no amount of central bank action may be enough. There is an extreme form of risk aversion right now which will support dollar buying in the end.“

Sources here, here & here