In terms of the effects of asset purchases on market functioning, on balance, the effect of the purchase programmes on market liquidity and price formation, has been positive. Importantly, there is no evidence of a systematic negative impact on liquidity in euro area sovereign bond markets and price formation in these markets has remained intact.
In particular, purchases have supported market functioning in times of severe stress, such as during the outbreak of the Covid-19 crisis early 2020. At the same time, liquidity conditions do warrant continued monitoring since purchases may at times have reduced liquidity in some smaller market segments, which has, however, been mitigated by precautionary measures such as the securities lending scheme.