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CBC starts buying bonds as part of €500m ‘QE’

Central Bank of Cyprus

THE Central Bank of Cyprus began purchases of Cypriot government bonds on Friday in the context of the European Central Bank ‘quantitative easing’ programme (QE), said CBC spokeswoman Aliki Stylianou.

“Following approval by the European Stability Mechanism on Thursday (of the 6th review of the Cyprus adjustment programme), the CBC proceeded with the purchasing of Cypriot bonds in the secondary market,” she said.

Stylianou added that the purchases lead to a reduction to the yields of Cypriot bonds by approximately 15 basis points.

On Thursday, the ESM said it will transfer the next tranche of €100m as part of the €5.8bn bailout programme.

“The CBC and the ECB will continue purchasing Cypriot bonds until the next programme review,” Stylianou noted.

The seventh review of the adjustment programme is expected to begin in mid July. Under the ECB rules, states whose bonds are below the investment category are eligible for QE only if they follow an adjustment programme and obtain positive implementation reviews on a quarterly basis, as Cyprus has just done.

Under the QE programme, the CBC is expected to buy government bonds amounting to €500m.

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