The European Central Bank has moved to protect its EUR50bn Greek-bond portfolio from losses by swapping the bonds for new ones issued by Greece. The exchange is aimed at protecting the ECB and the 17 central banks that make up the euro from any efforts to force the central bank to take losses through collective-action clauses connected with negotiations between private-sector
creditors and Greece, according to a person familiar with the matter. The ECB started purchasing Greek, Irish and Portuguese bonds in May 2010. The ECB justified the purchases by saying they were needed to ensure their interest-rate and bank-support measures transmitted through the economy. It bought these bonds from banks at distressed prices in the secondary market. (Wall
Street Journal)