If it isn't, the taxpayer will have to foot the bill. Whether that's "necessary, even desirable" is certainly debatable, De Grauwe does not inherit the definitive truth, otherwise he'd rule the world economy on his own and we'd all be rich AF. That, however, wasn't the topic.
The taxpayer would not have to foot the bill. The ECB is the institution that decides how much money there is. When they buy the bonds of a sovereign government, they can either do it using existing money, or just create new money with which to do so. If they do the former, taxpayers lose money, yes. However, decision to do the former rather than the latter is, again, a political choice. The consequence of the latter (creating enough new money to buy Greece's debt) causes an increase in the money stock - which causes inflation. In this case, it would not cause very much inflation, because Greece's debt compared to the Euro money stock is tiny, especially as the debt isn't being repaid in one go and isn't being repaid in full (by the ECB, at least). The reason the ECB would stick to using existing liquidity is because they would rather put the taxpayer at risk than suffer inflation - despite the fact that inflation might actually help push the Euro towards a more reasonable value for the southern economies.
Hmm, I wonder which political powers have a vested interest in low inflation and a low-valued Euro despite the wider harm to the European economy?
it is a mystery
