“They are at the same time, again eligible in the context of the public sector purchasing programme (PSPP) of the Eurosystem,” i.e. the European Central Bank (ECB) and the national banks of euro area member states, the central bank said in a statement on its website on Monday.
“The country’s return to investment grade rating will strengthen confidence in the Cypriot economy and, in particular, the domestic banking sector,” it said. “At the same time, the use of Cypriot government securities in the Eurosystem’s credit operations and their inclusion in the PSPP is expected to help contain the Republic of Cyprus’ borrowing cost and expand the banking system’s capacity to tap liquidity at low rates via the Eurosystem’s credit operations”.
The PSPP is part of the ECB’s expand asset purchasing programme, also known as quantitative easing, which came into life in early 2015 aiming at shielding the euro area’s anaemic growth from deflation. The ECB has said it would terminate net asset purchases by the end of 2018.
Cyprus participated for a brief period in the ECB’s asset purchase programme before it completed its adjustment programme in early 2016. The ECB’s cumulative purchases of Cypriot government securities are €214m and accounts for 0.1% of the total public sector securities bought by the ECB over the past 3.5 years.
Source: Cyprus Mail