5.5  Sovereign insolvency code  Looking ahead, there is an additional area where new regulatory provisions are required. In extreme cases, sovereigns, too, must in future be able to declare themselves insolvent, as the liability principle should also apply to them. Otherwise, the Eurosystem could come under pressure to finance cash-strapped governments at knock-down terms. So what happens when a sovereign defaults?
However, what I can rule out is that the intensity of our purchases has played a decisive role on a day-to-day basis, as the daily purchase amounts have been fairly constant. Interestingly, when we started purchases of sovereign bonds with yields below the deposit facility rate, yields at the short end actually increased.