Small-Scale Asset Purchases (SSAP)

Small-Scale Asset Purchases (SSAP) are monetary policy tools used by central banks to stimulate economic growth and manage inflation.

SSAP involves the central bank purchasing relatively small amounts of financial assets, such as government bonds, corporate bonds, or mortgage-backed securities.

Let’s explore small-scale asset purchases, their objectives and their potential impact on financial markets and the wider economy.

What is a small asset purchase?

Small-scale asset purchases (SSAP) are monetary policy tools used by central banks to stimulate economic growth and maintain price stability.

SSAP involves the purchase of a relatively small amount of an asset, usually a government bond or other fixed-income security, with the goal of increasing the money supply and lowering interest rates. ​​

Unlike large-scale asset purchases (LSAP), which are typically employed during periods of severe economic stress, SSAPs are used to provide targeted support to specific market segments or to fine-tune a central bank’s monetary policy.

SSAP is typically used when traditional monetary policy tools (such as interest rate changes) are ineffective or insufficient to stimulate economic growth.

By purchasing assets, central banks inject money into the economy, which leads to increased lending and investment, ultimately stimulating economic activity.


SSAP differs from large-scale asset purchases (LSAP), which involve purchasing larger amounts of assets, often with the goal of driving down long-term interest rates.

SSAPs are typically implemented on a smaller scale and target specific sectors of the economy, such as the housing market or small businesses.

One advantage of SSAP is that it can be implemented relatively quickly and with minimal disruption to financial markets.

Because SSAP involves relatively small asset purchases, it is unlikely to distort market prices or create asset bubbles.

SSAPs also have the advantage of being highly targeted, meaning they can be used to support specific sectors of the economy that may be struggling.

For example, a central bank could use SSAP to purchase mortgage-backed securities to support the housing market.

However, SSAP also has some disadvantages. One potential concern is that they may not be as effective as other monetary policy tools in stimulating economic growth.

Because the asset purchases involved in SSAP are relatively small, the impact on the overall economy is likely to be limited.

Another concern is that SSAP could cause inflation if the central bank purchases too many assets and injects too much money into the economy.

Inflation has a negative impact on economic growth by eroding the value of savings and reducing consumers’ purchasing power

Targets of small-scale asset purchases

SSAP’s main goals are:

  1. Lower long-term interest rates: By purchasing financial assets, central banks can increase demand for those assets, thereby pushing up their prices and lowering their yields (interest rates). Lower long-term interest rates stimulate borrowing and investment, thereby boosting economic growth.
  2. Improving Market Operations: SSAP can be used to address market disruption or disruption by providing liquidity and reducing volatility in targeted market segments.
  3. Signaling Monetary Policy Intent: Small-scale asset purchases can serve as a communication tool for a central bank to demonstrate its commitment to loose monetary policy or to guide market expectations for future policy actions.

The impact of small-scale asset purchases on financial markets and the economy

The impact of SSAP on financial markets and the broader economy depends on the size, maturity and type of assets purchased.

Some potential impacts of SSAP include:

  1. Lower Borrowing Costs: SSAP can lower long-term interest rates, making it cheaper for businesses and households to borrow and invest.
  2. Asset price increases: By increasing demand for financial assets, SSAP can increase their prices, thereby creating a wealth effect that may stimulate consumption and investment.
  3. Improving market operations: By providing targeted support to specific market segments, SSAP can help restore normal market operations and reduce volatility.
  4. Confidence Effect: By demonstrating the central bank’s commitment to easy monetary policy, SSAP can boost market confidence and encourage risk-taking behavior.
  5. Currency Impact: SSAP can affect exchange rates by increasing the supply of domestic currency, potentially leading to devaluation and improving export competitiveness.

Latest example of SSAP

While recent monetary policy actions have been primarily large-scale asset purchases (LSAP) in response to the COVID-19 pandemic, there have also been instances of smaller, targeted interventions by central banks that could be considered small-scale . Asset Purchase (SSAP).

Here are some examples:

European Central Bank (ECB) Long-Term Refinancing Objective (TLTRO)

While TLTRO is not a direct asset purchase program, it is a form of targeted monetary policy that provides long-term, low-interest loans to euro area banks.

These loans are intended to incentivize banks to lend to the real economy, especially small and medium enterprises (SMEs). The ECB has been using the TLTRO since 2014 and has expanded and refined it during the COVID-19 crisis.

Reserve Bank of Australia (RBA) 2020 Term Financing Facility (TFF)

In response to the COVID-19 pandemic, the RBA launched the TFF to provide banks with low-cost, three-year funding to support their lending activities.

While the TFF is not a traditional asset purchase program, it is a targeted intervention designed to support the provision of credit to Australian businesses and households.

Bank of England (BoE) Corporate Bond Purchase Program (CBPS)

Between 2016 and 2018, the Bank of England conducted a relatively small asset purchase program, purchasing £10 billion worth of investment-grade corporate bonds issued by British companies.

The plan aims to reduce borrowing costs for businesses and stimulate investment, while also demonstrating the central bank's commitment to supporting the British economy after Brexit.

While these examples may not be direct SSAPs, they illustrate the use of targeted interventions by central banks to address specific market segments or economic challenges.

These programs are smaller in scale than the massive quantitative easing measures implemented during the global financial crisis or the COVID-19 pandemic.


To sum up, small-scale asset purchases (SSAP) are a monetary policy tool used by the central bank to stimulate economic growth and maintain price stability.

SSAP involves the purchase of a relatively small amount of an asset, usually a government bond or other fixed-income security, with the goal of increasing the money supply and lowering interest rates. ​​

While SSAPs have some advantages, such as being more targeted and less disruptive to financial markets, they also have some disadvantages, such as being less effective than other monetary policy tools and being potentially inflationary.

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