The European Central Bank (ECB) may spend up to 800 billion ($1 trillion) on securitizations, covered bonds, and financial aid for banks in its upcoming stimulus measures, according to several market reports.
The size of the purchase program is key to its success. The ECB’s past covered bond purchase program “speak to the difficulties in executing viable purchase strategies of any magnitude,” stated Deutsche Bank analysts in a report Monday. In 2009 and 2010, under CPPB1 the ECB bought 60 billion of covered bonds in an effort to revive the market. In October 2011, under CPPB 2 the ECB purchased 14 billion out of a 40 billion target.