This has enabled banks that are having difficulties obtaining funding in the market to borrow from the ECB against acceptable collateral at the ECB’s policy rate for terms of up to one year or so. As mentioned above, some of this collateral has taken the form of secured issuance retained on the books of the issuing bank.
The ECB has also supported bank issuance through its covered bond purchase program. In its initial phase, which commenced in July 2009, the ECB purchased € billion in covered bonds. It has recently restarted the program with the intention to purchase a further € billion.