Bank of Lithuania Starts Auctions for Government Debt Securities Purchases for the Monetary Policy Purposes
The Bank of Lithuania, in close cooperation with the Eurosystem, will start to conduct reverse auctions on a trial basis in the course of October, purchasing debt securities issued by the Republic of Lithuania in the domestic market. This initiative is coordinated within the Eurosystem. Two other central banks - Banque de France and De Nederlandsche Bank N.V. - will also start to conduct auctions on a trial basis. The Bank of Lithuania’s auctions will be open to its monetary policy counterparties and will usually take place on Tuesdays and Thursdays. The first auction is to be held on 13 October 2015.
The auctions will be held on a trial basis, aiming to accrue experience to be used in the implementation of the Eurosystem’s monetary policy programmes. After sufficient experience is gained, the Bank of Lithuania and the Eurosystem will evaluate and assess the results. Higher transparency of the purchases is expected to encourage deepening of the securities market as well as contribute to its smoother functioning.
Government of the Republic of Lithuania debt security purchase auctions will be organised under the rules approved by the board of the Bank of Lithuania.
The trials do not imply a change in any of the current parameters of the PSPP. The trials target a very small part of the overall monthly purchases and take place alongside regular purchases.
Aiming to achieve inflation rates below, but close to, 2% over the medium term, the European Central Bank (ECB), jointly with the national central banks within the Eurosystem, is carrying out an expanded asset purchase programme. Under the third covered bond purchase programme (CBPP3), asset-backed securities purchase programme (ABSPP) and PSPP, which constitute the expanded asset purchase programme, the Eurosystem purchases securities amounting to EUR 60 billion every month.
The Bank of Lithuania participates in the PSPP since 9 March 2015 and purchases Republic of Lithuania government debt securities and bonds of European supranational institutions, which have been issued in euro and the maturity of which at the time of their purchase is 2 to 30 years.
The value of securities acquired during the PSPP (their holdings) by the Bank of Lithuania is presented in the Bank of Lithuania's balance sheet on a quarterly basis.