The Previously Ultra-Dovish ECB Maintains QT, Reduced Balance Sheet by €66 Billion in March, Now Down 50% from QE Asset Peak

ECB Continues Reducing QE Holdings

In March, the European Central Bank (ECB) decreased its portfolio of bonds and loans by €66 billion, further trimming its quantitative easing (QE) assets. These assets had reached a peak of €7.16 trillion in mid-2022. Since the start of quantitative tightening (QT), the ECB has reduced its QE holdings by €3.55 trillion ($4.14 trillion), which amounts to half of its original QE assets. This significant reduction, as detailed in the latest balance sheet, surpasses expectations for the ECB—once known for its highly accommodative policies—and sets it apart from other central banks.

The ECB implemented QE through two main channels: purchasing bonds and issuing loans. The total value of these assets surged from €690 billion in 2015 to €7.16 trillion by mid-2022. The bond purchases primarily consisted of government bonds from member countries, along with other types of securities.