During the conversation between Smith and the Oracle in her apartment, Smith implies the Oracle created him.

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> Oracle: What did you do with Sati?
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> Smith: Cookies need love like everything does. [laughs]
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> Oracle: You are a bastard.
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> Smith: You would know, **Mom.**
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> ***The Matrix Revolutions***
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In the conversation between the Architect and Neo, the Architect explains

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> The first matrix I designed was quite naturally perfect, it was a work of art, flawless, sublime. A triumph equaled only by its monumental failure. The inevitability of its doom is as apparent to me now as a consequence of the imperfection inherent in every human being, thus I redesigned it based on your history to more accurately reflect the varying grotesqueries of your nature. However, I was again frustrated by failure. I have since come to understand that the answer eluded me because it required a lesser mind, or perhaps a mind less bound by the parameters of perfection. **Thus, the answer was stumbled upon by another, an intuitive program, initially created to investigate certain aspects of the human psyche. If I am the father of the matrix, she would undoubtedly be its mother.**
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> ***The Matrix Reloaded***
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So, the Architect created the Matrix **too** perfectly and it collapsed. Then the Oracle came along and made things imperfect so humans could live more happily in their machine made energy harnessing pods.

**I believe the Oracle created Smith, given the dialogue above. But if there is evidence to say otherwise, please explain here.**

**Assuming the Oracle did create Smith, what was the purpose?** I believe ultimately that she created Smith so Neo would have bargaining power with the machines when he goes to make the peace deal (beating Smith for the Machines in return for freeing humans / not killing humans). But what **motivation** would the Oracle have to do this if she is just another program in the Matrix used to pacify humans.