In July 2024, the ECB also began to wind down its portfolio of bonds purchased in the pandemic emergency through the “Pepp” program, after doing the same with the “App” program in March 2023.
But the “quantitative tightening” of the pandemic emergency purchase program, in its first month, saved Italian securities. By reducing the stocks in the portfolio of major countries including France and Germany, but increasing those in Italy.
This was revealed by the data provided by the European Central Bank regarding the PEP portfolio from June 24 to July 24, when the ECB, faced with a $335 million increase in the Italian PEP portfolio, reduced Dutch securities by €2.8 billion, Belgians and Germans by €2.2 billion each, Austrians by €2.1 billion, French by €1.4 billion, and Spanish by €1.2 billion.
The PEPP portfolio readjustment which nevertheless allowed for the expected monthly reduction of 7.5 billion of the total portfolio of European securities, which had been anticipated from the outset by the instrument launched by the ECB in March 2020. The flexibility of the PEPP could stabilize spreads and could be an instrument capable of keeping the cost of debt under control for Italy, which according to Eurostat in 2023 – the year in which the ECB interest rates doubled – continued to fall to 2.9% compared to 3.2% in 2022.
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