The call of a hundred economists to cancel the public debts held by the ECB

More than 100 economists on Friday launched a call to cancel public debts held by the European Central Bank (ECB) to facilitate social and ecological reconstruction after the Covid-19 pandemic.

While public debt has increased sharply to protect households and businesses, "citizens are discovering, some with dismay, that nearly 25% of European public debt is now held by their central bank", point out these economists in a column in nine European publications.

"We owe ourselves 25% of our debt"

"We owe 25% of our debt to ourselves and if we pay that back, we'll have to find it elsewhere, either by borrowing again to roll over the debt instead of borrowing to invest, or by raising taxes, or by lowering expenditure ”, explain these economists, including 50 French, including Thomas Piketty (Paris School of Economics), former Belgian Minister Paul Magnette and former Hungarian European Commissioner Andor Lazlo.

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"The debt cannot increase indefinitely", warns the chief economist of the Treasury

For the ECB, canceling the debts of states, which are currently trading at very low or even negative rates, is "not an option", because "citizens would risk losing confidence in the currency", Fabio said in June. Panetta, Italian member of its board.

The signatories consider on the contrary that the institution based in Frankfurt could, by canceling its debts "offer European states the means of their ecological reconstruction, but also to repair the social, economic and cultural damage."

Compensation

The cancellation of public debts or their transformation into perpetual interest-free debts would be done in exchange for a commitment by States to "invest the same amounts in ecological and social reconstruction".

"These amounts now amount to nearly 2.500 billion euros for the whole of Europe", according to the appeal published in particular in Le Monde (France), El Pais (Spain), La Libre Belgium, Der Freitag (Germany) and Avvenire (Italy).

The signatories assert that “cancellation is not explicitly prohibited by European treaties” and that “history has repeatedly shown us that legal difficulties disappear before political agreements”.

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Worried about a possible return of austerity policies involving reductions in public debt such as those carried out from 2015 until the start of the Covid-19 crisis, academics also call for "a new European governance, in particular through the transition to qualified majority in tax matters ”.