In order not to compromise the financial independence of the central bank, policy-makers need to carefully assess the eligibility of all assets on account of the implications they could have for the risk exposure of the central bank’s balance sheet. Caution is also called for in another respect.
Outright purchases of privately issued securities need to be carefully planned to avoid allocative distortions in terms of industries, firms or regions. Also the size of the issuer matters. While it is easy to see how large firms can benefit from the central bank’s purchases of privately issued securities, it is more difficult to ensure that small and medium-sized companies get equal treatment.