Europe's Central Banks Begin Boosting QE Price Transparency

Updated on
  • Bank of France to follow Dutch, person familar with plan says
  • Transparency step is one `the market is asking for': ABN Amro

France is planning to join the Netherlands in taking steps toward greater transparency in the European Central Bank’s 80 billion euros-a-month ($91 billion) quantitative-easing program, according to a person with direct knowledge of the plans.

In the first disclosure of its kind in 13 months of QE, the Dutch Central Bank on Monday listed price and demand figures on its website for purchases of 41 million euros of public-agency debt. The Bank of France plans to begin publishing similar data, according to a person familiar with the situation who asked not to be named because the plans are still being worked on in private. Lithuania’s central bank has said it will do so starting this month.

“This is a step toward more transparency that the market is asking for,” said Kim Liu, a senior fixed-income strategist at ABN Amro Bank NV. “It helps in the price-discovery process, though only a little bit. It’s only a raindrop.”

The three institutions are leading a little-publicized effort in the 19-nation euro area to bring more openness to the ECB’s unprecedented injection of more than a trillion euros into the euro system. They are the only national central banks that use reverse auctions, in which potential sellers compete to undercut one another on price for securities that are publicly listed in advance by the central banks that want to buy them.

Price Discovery

The price data, which can help investors determine a fair value for relatively illiquid securities, will be released only from the reverse-auction sales, and not from the majority of the three central banks’ QE purchases.

The Dutch and French institutions only use the system for buying some agency and supranational debt, and not for the far larger buying of sovereign bonds. Lithuania’s acquires government bonds using the process, as did the Federal Reserve during its debt-purchase program.

Other euro-zone central banks buy all their debt in QE directly from investors and send their results to the ECB, which oversees the asset-purchase program and doesn’t release security-specific data. The ECB has acquired about 650 billion euros of public-sector debt since March 2015 without publishing price data.