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Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right

The coronavirus crisis has led to a sharp increase in the debt-to-GDP ratios of the euro area member states. Without external support, access to the capital market could be seriously threatened in the medium term for Italy, but also for other member states. While the Pandemic Emergency Purchase Prog...

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Detalles Bibliográficos
Autores principales: Hansen, Arne, Meyer, Dirk
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer Berlin Heidelberg 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8341253/
https://www.ncbi.nlm.nih.gov/pubmed/34376869
http://dx.doi.org/10.1007/s10272-021-0984-7
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author Hansen, Arne
Meyer, Dirk
author_facet Hansen, Arne
Meyer, Dirk
author_sort Hansen, Arne
collection PubMed
description The coronavirus crisis has led to a sharp increase in the debt-to-GDP ratios of the euro area member states. Without external support, access to the capital market could be seriously threatened in the medium term for Italy, but also for other member states. While the Pandemic Emergency Purchase Programme, which is designed as a monetary policy instrument, is regarded by some as a violation of the prohibition of monetary financing, the Next Generation EU recovery fund is likely to direct the fundamental structures of the European Union towards a fiscal union with considerable redistribution elements. This article analyses an alternative strategy, namely debt relief by the European System of Central Banks through an EU debt agency. Such a scheme would be possible without amending the EU treaties and would avoid negative equity at the central banks. The question is under what circumstances would this approach be suitable and proportionate?
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spelling pubmed-83412532021-08-06 Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right Hansen, Arne Meyer, Dirk Inter Econ Articles The coronavirus crisis has led to a sharp increase in the debt-to-GDP ratios of the euro area member states. Without external support, access to the capital market could be seriously threatened in the medium term for Italy, but also for other member states. While the Pandemic Emergency Purchase Programme, which is designed as a monetary policy instrument, is regarded by some as a violation of the prohibition of monetary financing, the Next Generation EU recovery fund is likely to direct the fundamental structures of the European Union towards a fiscal union with considerable redistribution elements. This article analyses an alternative strategy, namely debt relief by the European System of Central Banks through an EU debt agency. Such a scheme would be possible without amending the EU treaties and would avoid negative equity at the central banks. The question is under what circumstances would this approach be suitable and proportionate? Springer Berlin Heidelberg 2021-08-05 2021 /pmc/articles/PMC8341253/ /pubmed/34376869 http://dx.doi.org/10.1007/s10272-021-0984-7 Text en © The Author(s) 2021 https://creativecommons.org/licenses/by/4.0/This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (https://creativecommons.org/licenses/by/4.0/). Open Access funding provided by ZBW — Leibniz Information Centre for Economics.
spellingShingle Articles
Hansen, Arne
Meyer, Dirk
Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title_full Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title_fullStr Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title_full_unstemmed Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title_short Debt Relief as a Last Resort for the Lender of Last Resort?: Monetary Financing — Doing It Right
title_sort debt relief as a last resort for the lender of last resort?: monetary financing — doing it right
topic Articles
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8341253/
https://www.ncbi.nlm.nih.gov/pubmed/34376869
http://dx.doi.org/10.1007/s10272-021-0984-7
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