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

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  • De Grauwe, Paul

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.

Suggested Citation

  • De Grauwe, Paul, 2015. "Greece is solvent but illiquid: What should the ECB do?," CEPS Papers 10694, Centre for European Policy Studies.
  • Handle: RePEc:eps:cepswp:10694
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    File URL: https://www.ceps.eu/system/files/PDG_Greece.pdf
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    Cited by:

    1. Ian Ball, 2015. "Debate: Would IPSAS help Greece?," Public Money & Management, Taylor & Francis Journals, vol. 35(6), pages 397-398, November.
    2. Yu-Fu Chen & Michael Funke, 2017. "Greeceā€™s Three-Act Tragedy: A Simple Model of Grexit vs. Staying Afloat inside the Single Currency Area," Open Economies Review, Springer, vol. 28(2), pages 297-318, April.

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