Central Banks, most notably the European Central Bank, has three key roles in the covered bond market. The first is acting as investors. Secondly, as repo counterparties and lastly via their quantitative easing and asset purchasing programmes.
Key learning objectives:
Discuss the Central Banks involvement in the covered bond market as investors, as repo counterparties and via their QE programmes
Explain the disadvantages of the previous programmes
Identify the ECB’s criteria and rules for purchasing and holding covered bonds