Flags of Greece, the European Union and the National Bank of Greece flutter on a balcony of Greece's National Bank in central Athens February 11, 2015.

Publication Type

ECB Interventions in Distressed Sovereign Debt Markets: The Case of Greek Bonds

Christoph Trebesch (Kiel University) and Jeromin Zettelmeyer (PIIE)

Working Papers 18-1
Photo Credit: REUTERS/Yannis Behrakis


The authors study central bank interventions in times of severe distress (mid-2010), using a unique bond-level dataset of European Central Bank (ECB) purchases of Greek sovereign debt. ECB bond buying had a large impact on the price of short and medium maturity bonds, resulting in a remarkable “twist” of the Greek yield curve. However, the effects were limited to sovereign bonds actually bought. The study finds little evidence for positive effects on market quality or spillovers to close substitute bonds, credit default swap markets, or corporate bonds. The paper’s findings attest to the power of central bank intervention in times of crisis but also suggest that in highly distressed situations, this power may not extend beyond assets actually purchased.

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