Eesti Pank’s participation in the asset purchase programmes of the euro area
* net purchases include bonds redeemed at maturity
** at amortised acquisition cost
*** in November 2019 Eesti Pank bought securities for a lower amount than the central bank received from securities that reached maturity. When securities reach maturity they must be redeemed, meaning the institution that issued them must pay an agreed amount to the holder of the security. The central banks of the euro area have agreed to use reinvestment for the asset purchase programme, meaning that securities reaching maturity are replaced by newly purchased securities. Smoothing is used in reinvestment, which means that the total amount of reinvestment in a year is distributed evenly across the months regardless of the value of securities maturing in any given month.
Eesti Pank has made purchases of bonds of supranational European institutions and from June 2020 it has also purchased Estonian government bonds within the PSPP.
From June 2015 to May 2016, Eesti Pank had a special exemption allowing it to buy the bonds of the state-owned transmission system operator Elering. From June 2016 the central banks of the euro area had been able to buy corporate bonds as part of the separate Corporate Sector Purchase Programme (CSPP). Six euro area central banks that specialise in this class of assets have bought the corporate bonds, the central banks being those from Belgium, Germany, Spain, France, Italy and Finland. The Finnish central bank buys bonds issued by Estonian companies that meet the quality requirements, these currently being Elering and Eesti Energia. The euro area central banks do not publish a breakdown of their bond purchases by company. The income and risks from the purchases of corporate bonds are shared between all the central banks of the euro area using the capital key of the European Central Bank, which gives Eesti Pank a share of 0.2794%. The financial risks of the Elering bonds that Eesti Pank bought earlier as an exception are borne by Eesti Pank alone.
The bank also started to participate in the third Covered Bond Purchase Programme (CBPP3) in 2020, though it was first announced in 2014. The commercial banks in Estonia first issued covered bonds only in 2020. The income and risks from the purchases of covered bonds are also shared between all the central banks of the euro area using the capital key of the European Central Bank.
Eesti Pank also bought bonds under the Pandemic Emergency Purchase Programme (PEPP), though the central banks of the euro area do not publish those purchases by country.