DEBT RELIEF TO ALL EURO AREA COUNTRIES, BY ECB

Realism is that euro area countries have too much debt. 60 % should be  the maximum.

Debt-to-GDP ratios:

Italy 130 %

Spain 97 %

France 98 %

Belgium 102 %

Greece 181 %

Finland 60 %

Germany 60 %. 

These figures are rapidly encreasing because of coronacrisis.

Economist Vesa Vihriälä has made a proposal of debt relief.  It concerns those debts in which ECB is the creditor and euro area country is the debtor.

https://voxeu.org/article/make-room-fiscal-action-through-debt-conversion

Also Sony Kapoor and Willem H Buiter:

https://voxeu.org/article/fight-covid-pandemic-policymakers-must-move-fast-and-break-taboos

This is called monetary financing.

It has already happened during 2015-2020 (for 2.632 billion euros) when ECB (ECB together with national central banks) has bought bonds from euro area countries.

The encrease of money in the market has already happened. And it has not caused inflation.

Usually people are afraid that printing of money can cause high inflation.

As it caused after the second world war.

But now the situation is in my opinion  totally different. There are a lot of goods to buy in Europe and around the world.

This is my first time I am proposing something like this.

In the beginning of 2018 I made a large proposal what to do to the budjet of Finland. 

Inflation is exceptionally low, close to 1 %.

If ECB continues to buy bonds of euro area countries, and its euro bond stock encreases to 5.000 billion euros, debt relief would look like this (some countries for example) (in the same proportion as capital subscription):

Spain 484 billion

Germany 1.072 billion

Italy 690 billion

Finland 75 billion.

2)  While effectively forgiving past debt would create expectations that the same could happen again in the future, EU would also need legislation concerning the debt adjustment of a state. 

The fear of credit loss would make investors careful with lending money to a heavy debted country.

________ 

I am gathering seven persons living in different EU countries to make together a European citizens’ initiative.

If you are interested or know someone who might be interested please let me know.