The governing mandate of the European Central Bank (ECB) is to ensure the price stability of the euro. And until the current debt crisis, the bank was widely considered to be doing a sterling job.

But that view changed last May when the ECB took the controversial step of buying up Greek sovereign bonds. Praise turned to criticism, and the word among some analysts was that the bank had overstepped the mark.

Not everyone, however, agreed with that assessment. Gertrud Traud, chief economist with the Landesbank Hessen-Thüringen, Helaba, said at the time that critics of the ECB decision were playing a game of double standards.

"It's interesting that in the context of the ECB the dogmatic types start to shout," Traud noted. "Yet when the Bank of England and the US Federal Reserve did the same thing during the financial crisis, they were celebrated."

Mounting bonds

For a while the ECB stopped buying bonds from Greece, Portugal and Ireland, but resumed the practice again in August, this time adding Spain and Italy to its list of vendors.

Outgoing President Jean-Claude Trichet, under whose direction the ECB accumulated 170 billion euros worth of sovereign debt, justified the move on the grounds that it supports the bank's monetary policy.

But chief economist at Germany's Commerzbank, Jörg Krämer, said Trichet jumped the gun in a bid to do what politicians wanted of him.

"Even without this ECB decision to buy state bonds, I think politicians would have reacted long ago," Krämer told Deutsche Welle.

Unlimited liquidity

Besides buying up sovereign bonds, the European Central Bank's efforts to stabilize financial markets have seen it give banks access to unlimited liquidity for relatively short periods of time before withdrawing it when the market's needs are met.

The strategy is aimed at preventing inflation, and is a lifeline for many banks, which are losing one another's trust as the crisis drags on.

Worried that their competitors have too many sovereign bonds from crisis-ridden countries on their books, they no longer lend to each other.

In October the ECB tried to defuse the situation by making long-term credit of more than a year available to banks, and rolling out its offer of unlimited liquidity at its key interest rate of 1.5 percent.

Some observers say the measures go much too far; others say they do not go far enough.

For his part the incoming ECB head, Mario Draghi, has already indicated that he sees these unconventional policies as being "temporary by nature".

Reporter: Brigitte Scholtes / tkw
Editor: Sam Edmonds