Payments undertaken as part of the asset purchase programme are also settled via TARGET2. APP implementation is distinct from that of refinancing operations because it can entail immediate cross-border payments. Indeed, around 80% of total NCBs’ purchases have been by financial market parties that are not resident in the same country as the purchasing central banks, thereby impacting TARGET balances.
Moreover, the sellers of the assets purchased under the APP can reinvest the proceeds, inducing a cross-border rebalancing of their portfolio. This phenomenon, referred to as international portfolio rebalancing, can prompt further changes in TARGET balances, following the same logic I have just outlined.