Econostrum | Economic News in the Mediterranean



A hundred economists call on the ECB to cancel the public debts it holds

The ECB holds 25% of the debt of the EU Member States (photo: F.Dubessy)
The ECB holds 25% of the debt of the EU Member States (photo: F.Dubessy)
EU. More than a hundred economists, including about fifty French, ask the European Central Bank (ECB) in a forum to cancel the public debts it holds to facilitate resilience in the post-Covid-19 era.

This appeal, published on Friday 5 February 2021 in nine European newspapers in French, English, German, Italian and Spanish, states that "citizens are discovering, some of them with dismay, that nearly 25% of European public debt is now held by their central bank. We owe ourselves 25% of our debt".

These amounts now represent nearly €2 500 billion. "If we repay this sum, we have to find it elsewhere, either by re-borrowing to roll the debt instead of borrowing to invest, or by raising taxes, or by cutting spending", notes the manifesto.

The collective of economists indicates that in exchange for writing off public debts, or transforming them into interest-free perpetual debts, states would commit to "invest the same amounts in ecological and social reconstruction". And could "also repair the social, economic and cultural damage after the terrible health crisis we are going through".

"Cancelling debts is not an option"

"On the one hand, any financial institution in the world can waive claims and the ECB is no exception. On the other hand, the word "write-off" does not appear either in the Treaty or in the Protocol on the European System of Central Banks (ESCB)", argues the text.

The institution does not seem to validate this solution. In any case, not Fabio Panetta. An Italian member of the ECB's executive board, he had declared in June 2020, in an interview with the French daily Le Monde, that cancelling state debts, which are traded at very low or even negative rates, was "not an option". According to him, "citizens would risk losing confidence in the currency" and this would "end in financial disorder".

Created in June 1998 and based in Frankfurt am Main, the ECB is the central bank of the nineteen countries in the euro zone. It is chaired, since 1 November 2019, by the French Christine Lagarde.

Read the full text and see the list of signatories of the forum "Cancel the public debts held by the ECB to take back our destiny".

Eric Apim

Friday, February 5th 2021

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