5 The crisis hurt the primary market for covered bonds badly, making it more difficult for banks to refinance and thereby reducing their willingness to grant longer-term loans. After fostering bank lending on the shorter end through the unlimited provision of one-year funds, the Eurosystem decided to support the markets necessary for more long-term refinancing by buying covered bonds outright.
The purchases should help revive the market in terms of liquidity, spreads and ultimately issuance. The purchase program has a volume of 60 billion EUR and will be executed over the coming year. Purchases started on 6 July 2009 and by 31 August the Eurosystem has acquired bonds worth 9.2 billion EUR. 2.4.