The direct purpose of the ECB’s intervention has been to ensure that each bank – irrespective of its location in a particular euro area country – has sufficient reserves to deal with the possibility that creditors may refuse to roll over loans to that bank.
Concretely, in some cases the reserves borrowed by distressed banks have been transferred to the creditors of those banks, often banks in the main current-account-surplus country in the euro area, Germany. The ECB has acted, on a temporary basis, as a substitute for decentralised markets within the euro area.9 As a by-product of these developments, so-called TARGET2 imbalances have emerged.