Paul Lachine

The ECB’s Secret Bailout Strategy

For many, Greece, Ireland, and Portugal had to seek an EU bailout, and Spain is a potential candidate, because international markets no longer wanted to finance their current-account deficits. But international markets have not financed any of them for the past three years; the European Central Bank has.

MUNICH – Why did Greece, Ireland, and Portugal have to seek shelter under the European Union’s rescue umbrella, and why is Spain a potential candidate?

For many, the answer is obvious: international markets no longer want to finance the “GIPS.” But that is only half true. In fact, international markets have not financed any of them to a considerable extent for the past three years; the European Central Bank has. The so-called “Target” accounts, hitherto ignored by the media, show that the ECB has been much more involved in rescue operations than is commonly known.

But now the ECB no longer wants to do it, and is urging eurozone members to step in.

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