The details of the announced QE programme were much clearer than we are used to when the ECB launches new measures. However, the legal acts have not been published yet and one of the unanswered questions is how the purchases will be conducted across countries, i.e. is the German Bundesbank only going to buy German government bonds or will it buy across countries?
In our view, it is most likely that the National Central Banks only buy their own country's government bonds required to reach the share of ECB's capital key . This follows as the Governing Council intends to share the profits the same way as losses and this will be easier to do if the bonds are purchased by the NCB itself.
We do not believe the way the government bonds are purchased will have implications for the financial or economic impact of the QE programme . This follows as the size and distribution of the purchases have already been determined.
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