In July 2022, the Governing Council introduced a new monetary policy instrument, the transmission protection instrument (TPI), with the aim of ensuring that the monetary policy stance is transmitted smoothly across all euro-area countries. The TPI is an additional tool at the ECB's disposal that can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area. To this end, subject to fulfilling established criteria, the Eurosystem may conduct secondary market purchases of securities issued in jurisdictions experiencing a deterioration in funding conditions not warranted by country-specific fundamentals. The scale of TPI purchases, which are not restricted ex ante, depends on the severity of the risks facing monetary policy transmission. By safeguarding the transmission mechanism, the TPI allows the Eurosystem to more effectively deliver on its price stability mandate.
