I read the following in a blog post entitled, “Let’s throw away the acronyms and explain Europe’s crazy policies in plain English”, at http://blogs.telegraph.co.uk/:
If a country asks for help, and if it is prepared to have its government spending levels dictated to it, it qualifies for this scheme. To help, the ECB will sell assets it holds on behalf of all governments in the euro area. No new money will be printed. The ECB will use the money raised to interfere with the price of government debt, making it cheaper to borrow.
If the worst happens and the country goes bust, the ECB, and consequentially Europeans, will not get paid back first. Instead they will have to wait in line with other creditors. There is no limit to how much money we are prepared to spend on this.
The trade-off for the country involved is that it can still borrow but will lose control of its own budget. The trade-off for the rest of Europe is that the ECB might lose their government’s money if the country seeking help goes bankrupt. However, the currency block will stay together if the plan works.
