Frequently asked questions on non-financial commercial paper purchases under the Eurosystem’s monetary policy purchase programmes

Updated on 8 January 2025

The Eurosystem no longer conducts purchases of corporate sector securities under the asset purchase programme (APP) or the pandemic emergency purchase programme (PEPP). This follows the Governing Council’s decision on 15 June 2023 to discontinue reinvestments under the APP from July 2023 and the Governing Council’s decision on 12 December 2024 to discontinue fully reinvestments under the PEPP at the end of 2024.

As part of the policy response to the COVID 19 pandemic, the Eurosystem made substantial purchases of commercial paper. Commercial paper was eligible for purchase following the launch of the corporate sector purchase programme (CSPP) in March 2016. However, until March 2020 only commercial paper with a remaining maturity greater than six months was eligible for purchase. The Governing Council decision of 18 March 2020 extended the maturity range of non-financial commercial paper eligible for purchase.

These frequently asked questions set out how the Eurosystem operationalised commercial paper purchases in further detail. For additional information, see the frequently asked questions on purchases of corporate sector debt instruments and the CSPP Decision.

Eligibility criteria

Q1.1 What eligibility criteria applied for the non-financial commercial paper purchased by the Eurosystem?

To be eligible for purchase, non-financial commercial paper had to fulfil the CSPP eligibility requirements and be issued by a CSPP eligible entity. The Eurosystem’s collateral framework – i.e. the rules that lay out which assets are acceptable as collateral for monetary policy credit operations – was the guiding principle for establishing the eligibility of all assets that could be purchased under the Eurosystem’s monetary policy purchase programmes, including for non-financial commercial paper. This means that commercial paper issued by non-investment firms and non-bank corporates was eligible for purchases, as long as it also fulfilled all other eligibility requirements. Furthermore, a commercial paper security had to have a minimum outstanding issuance amount of €10 million.

Q1.2 The Eurosystem’s collateral requirements were the guiding principle for establishing eligibility. Where can we find the relevant rules?

In order to be eligible as collateral for Eurosystem credit operations, marketable assets must comply with the eligibility criteria set out in the General framework. Additional temporary measures on collateral eligibility are contained in the Temporary framework . For further information on the discontinuation timeline of certain temporary asset types and other changes to the Eurosystem collateral framework, see the ECB announcement on 29 November 2024.

Q1.3 What maturity requirements did the Eurosystem apply for its commercial paper purchases?

The Eurosystem could purchase marketable debt instruments that had an initial maturity of 365/366 days or less with a minimum remaining maturity of at least 28 days.

Q1.4 How did the Eurosystem treat commercial paper that had lost eligibility?

The Eurosystem could choose to, but was not required to, sell its holdings in the event of a loss of eligibility, e.g. in the case of a downgrade below the credit quality rating requirement.

Q1.5 Was commercial paper issued by an agency eligible for the CSPP and the corporate sector pandemic emergency purchase programme?

No. Securities issued by agencies, as referenced on the ECB’s website, were eligible for purchase under the Eurosystem purchase programmes for public sector issuers.

Q1.6 Did the ECB consider purchases of non-financial commercial paper that was unrated or had a credit rating from a rating agency that was not accepted by the Eurosystem?

In line with the general requirements for purchases of corporate sector debt instruments – which are based on the Eurosystem’s collateral framework -, the Eurosystem only considered credit assessments provided for the issue, issuer or guarantor by credit rating agencies (i.e. ECAIs) which are accepted under the Eurosystem credit assessment framework (ECAF). Programme ratings are accepted only if they are explicitly and unambiguously mapped to individual ISIN codes by the relevant ECAI. For eligibility purposes, a credit rating from at least one of the accepted ECAIs had to comply with the minimum rating threshold established in the Eurosystem collateral framework, i.e. a rating equivalent to or above credit quality step 3 of the Eurosystem’s harmonised rating scale. The Eurosystem prioritised ECAI issue ratings over ECAI issuer or ECAI guarantor ratings.

Q1.7 Could non-rated but listed commercial paper be eligible for purchase?

A security’s listing in a dedicated secondary market did not replace the need to comply with the Eurosystem’s credit quality requirements as reflected in ECAI credit ratings. The Eurosystem accepted either issue, issuer or, if applicable, guarantor ratings. The Eurosystem prioritised ECAI issue ratings over ECAI issuer or ECAI guarantor ratings.

Q1.8 The STEP market is included in the ECB list of accepted non-regulated markets. Were STEP Euro Commercial Paper (ECP) Programmes automatically eligible?

A STEP label ensures that one of the necessary criteria for collateral eligibility is met. However, non-financial commercial paper with a STEP label had to also comply with all other eligibility criteria.

Implementation of purchases

Q2.1 Could transactions be conducted in both the primary and secondary markets?

Transactions could, in principle, be conducted in both the primary and the secondary markets.

Q2.2 How did the Eurosystem conduct commercial paper purchases?

Purchases were conducted through the Eurosystem’s eligible APP counterparties.

Q2.3 Could asset managers and non-bank financial institutions offer eligible securities for purchase under the APP and PEPP?

Asset managers and non-bank financial institutions were not eligible counterparties and therefore could not directly sell securities to the Eurosystem under the APP and PEPP. However, the Eurosystem allowed eligible counterparties to share offers of eligible securities on behalf of non-eligible counterparties, such as asset managers and non-bank financial institutions, under its monetary policy purchase programmes. Although final responsibility for the offered assets remained entirely with the eligible counterparties, these counterparties could include the assets in the daily inventories that they shared with the Eurosystem, either by explicitly reporting which assets were offered on behalf of non-eligible counterparties or by aggregating them with their inventories. In periods of heightened investor uncertainty, this option contributed to alleviating market tensions and supporting proper market functioning.

Q2.4 Who conducted Eurosystem purchases of commercial paper?

The six NCBs which conducted purchases of corporate sector debt instruments also carried out the commercial paper purchases on behalf of the Eurosystem. These NCBs were: the Nationale Bank van België/Banque Nationale de Belgique, the Deutsche Bundesbank, the Banco de España, the Banque de France, the Banca d’Italia and Suomen Pankki – Finlands Bank. The ECB coordinated these purchases, as it did for all purchase programmes.

Limits and reporting

Q3.1 Were there any limits on the amount of commercial paper that the Eurosystem could purchase from each issuer?

Yes. The Eurosystem had a risk control framework in place to manage its exposure to individual issuers. In calculating the commercial paper limits that applied for individual issuers, the framework took into account such factors as the issuer’s total outstanding amount of eligible commercial paper and the overall size of its commercial paper programme. The framework ensured that the Eurosystem could purchase sufficient amounts of commercial paper to successfully pursue its policy objective, while adequately managing the risks to its balance sheet.

Q3.2 Did you publish the list of commercial paper securities holdings?

No. Publishing a list of commercial paper securities held by the Eurosystem could have undermined the policy objective of the purchases. Furthermore, as commercial paper is not commonly used in securities lending, a list of available Eurosystem securities offered little added value in this regard. Lists of holdings under the other programmes are mainly provided for securities lending purposes. Therefore, the ECB refrained from publishing a list of commercial paper securities holdings. Since April 2023 the Eurosystem is no longer holding commercial paper securities.