Bonds issued primarily in Great Britain, Spain, Ireland and the U.S. which are secured – by liability of the issuing institution as well as – cover by a special pool of collateral consisting of mortgages or government bonds. They are broadly equivalent to the German Pfandbrief. Covered bonds are legally based on the respective national laws. However, there is as yet (fall 2011) no EU-wide minimum legal standard. – As part of its quantitative easing policy, the ECB purchased Pfandbriefe and covered bonds for the first time in the spring of 2009 to the tune of EUR 60 billion. This sub-market, which was almost drying up as a result of the financial crisis that followed the subprime crisis, then recovered noticeably. Risk premiums narrowed, and issuance activity on the primary market increased again significantly. This extraordinary central bank measure ([euro-denominated] Covered Bond Purchase Programme, CBPP) then reached its provisional conclusion on June 30, 2010, when the announced purchase volume of EUR 60 billion was reached. – See bond, asset-backed, building societies, land credit institution, coverage ratio, three-year tender, mortgage bank, cliff effect, quantitative easing, real estate investment trust, social mortgage bond, subprime crisis, home ownership. – Cf. ECB Monthly Report of February 2008, p. 89 et seq. (covered bonds in the wake of the subprime crisis), Deutsche Bundesbank Monthly Report of August 2010, p, 25 (purchase volume of EUR 60 bn had been reached by the end of June 2010), ECB Annual Report 2011, p. 89 (covered bond purchase program of October 2011).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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