White Paper No. 12, 2010

The Greek Sovereign Debt Crisis and ECB Policy

The Greek sovereign debt crisis has delayed the ECB’s exit from its current highly expansionary monetary policy stance. It has also complicated it since the ECB now holds considerable quantities of Greek public debt, which exposes the ECB to considerable credit risk. Moreover, the delay of the exit means that it has to take place in a situation on which public debts are even larger. There is still risk of contagion.