Greece is solvent but illiquid: What should the ECB do?

Paul De Grauwe

CEPS Papers from Centre for European Policy Studies

Abstract: In a CEPS Commentary, Paul De Grauwe argues that the Greek government is solvent but is trapped in a liquidity dilemma in which cannot find liquidity because markets believe it cannot find liquidity. He then explores the role of the European Central Bank in this self-fulfilling problem and ask specifically whether its outright monetary transactions (OMT) programme, introduced in September 2012, should be used to ease the constraints on Greece.

Pages: 3 pages
Date: 2015-06
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Persistent link: https://EconPapers.repec.org/RePEc:eps:cepswp:10694

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