Editing European Central Bank (section)

==== Market interventions (2010–2011) ====
[[File:ECB SMP Bond Purchases.png|thumb|upright=0.9|ECB Securities Markets Programme (SMP) covering bond purchases since May 2010]]
In a remarkable u-turn, the ECB announced on 10 May 2010,<ref>{{Cite press release|url=https://www.ecb.europa.eu/press/pr/date/2010/html/pr100510.en.html|title=ECB decides on measures to address severe tensions in financial markets|website=European Central Bank|language=en|access-date=22 September 2018}}</ref> the launch of a "Securities Market Programme" (SMP) which involved the discretionary purchase of sovereign bonds in secondary markets. Extraordinarily, the decision was taken by the Governing Council during a teleconference call only three days after the ECB's usual meeting of 6 May (when Trichet still denied the possibility of purchasing sovereign bonds). The ECB justified this decision by the necessity to "address severe tensions in financial markets." The decision also coincided with the EU leaders decision of 10 May to establish the European Financial Stabilisation mechanism, which would serve as a crisis fighting fund to safeguard the euro area from future sovereign debt crisis.<ref>{{Cite news|url=https://euobserver.com/economic/30048|title=Mixed support for ECB bond purchases|access-date=22 September 2018|language=en}}</ref>

Although at first limited to the debt of Greece, Ireland and Portugal, the bulk of the ECB's bond buying eventually consisted of Spanish and Italian debt.<ref>{{cite news |first1=John |last1=McManus |first2=Dan |last2=O'Brien |title=Market rout as Berlin rejects call for more EU action |journal=Irish Times |date=5 August 2011 }}</ref> These purchases were intended to dampen international speculation against stressed countries, and thus avoid a contagion of the Greek crisis towards other Eurozone countries. The assumption—largely justified—was that speculative activity would decrease over time and the value of the assets increase.

Although SMP purchases did inject liquidity into financial markets, all of these injections were "sterilized" through weekly liquidity absorption. So the operation was net neutral in liquidity terms (though this was of little practical importance since normal monetary policy operations were ensuring unlimited supplies of liquidity at the main policy interest rate).<ref name="Euro debt working paper">{{cite web|date=February 2011|title=WOrking paper 2011 / 1 A Comprehensive approach to the EUro-area debt crisis|url=http://unipub.lib.uni-corvinus.hu/304/1/wp_2011_1_darvas.pdf|access-date=28 October 2011|work=Zsolt Darvas|publisher=Corvinus University of Budapest}}</ref>{{Citation needed|reason=Reference does not mention 'sterilized injections' or 'liquidity absorption'. Add page number, or a different source.|date=April 2019}}<ref>{{Cite web|date=June 2010|title=Euro area money growth and the 'Securities and Markets Programme'|url=https://www.ecb.europa.eu/pub/pdf/other/mb201006_focus01.en.pdf|website=European Central Bank}}</ref>

In September 2011, ECB's Board member [[Jürgen Stark]], resigned in protest against the "Securities Market Programme" which involved the purchase of sovereign bonds from Southern member states, a move that he considered as equivalent to [[monetary financing]], which is prohibited by the EU Treaty. The ''[[Financial Times Deutschland]]'' referred to this episode as "the end of the ECB as we know it", referring to its hitherto perceived "hawkish" stance on inflation and its historical [[Deutsche Bundesbank]] influence.<ref>{{cite news|author=Proissl, von Wolfgang|date=9 September 2011|title=Das Ende der EZB, wie wir sie kannten|language=de|trans-title=The end of the ECB, as we knew it|work=[[Financial Times Deutschland]]|department=Kommentar|url=http://www.ftd.de/politik/europa/:stark-ruecktritt-das-ende-der-ezb-wie-wir-sie-kannten/60102214.html|url-status=dead|archive-url=https://web.archive.org/web/20111015235754/http://www.ftd.de/politik/europa/%3Astark-ruecktritt-das-ende-der-ezb-wie-wir-sie-kannten/60102214.html|archive-date=15 October 2011}}</ref>

As of 18 June 2012, the ECB in total had spent €212.1bn (equal to 2.2% of the Eurozone GDP) for bond purchases covering outright debt, as part of the Securities Markets Programme.<ref>{{cite web|url=http://www.commbank.com.au/corporate/research/publications/economics/economic-issues/international/2012/180612-ECB.pdf|title=The ECB's Securities Market Programme (SMP) – about to restart bond purchases?|work=Global Markets Research – International Economics|publisher=Commonwealth Bank|date=18 June 2012|access-date=21 April 2013}}</ref> Controversially, the ECB made substantial profits out of SMP, which were largely redistributed to Eurozone countries.<ref>{{Cite news|url=http://www.positivemoney.eu/2018/07/ecb-smp-profits-billions-lost-for-greece/|title=How Greece lost billions out of an obscure ECB programme|date=25 July 2018|work=Positive Money Europe|access-date=25 September 2018|language=en-GB}}</ref><ref>{{Cite web|url=http://www.guengl.eu/news/article/the-ecb-as-vulture-fund-how-central-banks-speculated-against-greece-and-won|title=The ECB as vulture fund: how central banks speculated against Greece and won big – GUE/NGL – Another Europe is possible|website=guengl.eu|language=en|access-date=25 September 2018|archive-date=26 September 2018|archive-url=https://web.archive.org/web/20180926014354/http://www.guengl.eu/news/article/the-ecb-as-vulture-fund-how-central-banks-speculated-against-greece-and-won|url-status=dead}}</ref> In 2013, the [[Eurogroup]] decided to refund those profits to Greece, however, the payments were suspended from 2014 until 2017 over the conflict between [[Yanis Varoufakis]] and ministers of the Eurogroup. In 2018, profits refunds were reinstalled by the Eurogroup. However, several NGOs complained that a substantial part of the ECB profits would never be refunded to Greece.<ref>{{Cite news|url=http://www.positivemoney.eu/2018/10/petition-eurogroup-return-ecb-profits-to-greece/|title=Unfair ECB profits should be returned to Greece, 117,000 citizens demand|date=19 October 2018|work=Positive Money Europe|access-date=21 October 2018|language=en-GB}}</ref>