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Managing sovereign debts held by the ESCB: Operational and legal constraints

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  • Micossi, Stefano

Abstract

Following the proposal by Avgouleas and Micossi (2021) and Micossi (2021), several authors (Amato and Saraceno 2022, Baglioni and Bordignon 2022, Cottarelli and Galli 2021, D�Amico et al. 2022) have engaged in the debate on how to manage the sovereign debt portfolio accumulated by the European System of Central Banks (ESCB) as a result of their purchase programmes undertaken since 2015 to fight deflation in the eurozone and provide emergency support to the economy in response to the Covid-19 pandemic. These proposals share the common goal of addressing an important and urgent public policy problem but differ in their specific institutional solutions. This paper provides an assessment of their consistency with present European legal and institutional arrangements in order to assess their practical relevance. The conclusion is that a new mechanism is needed to free the ESCB of the encumbrance of the sovereigns acquired following their assets purchase programmes. The ESM could perform that task while respecting all relevant European law.

Suggested Citation

  • Micossi, Stefano, 2022. "Managing sovereign debts held by the ESCB: Operational and legal constraints," CEPS Papers 35443, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:35443
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    References listed on IDEAS

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    1. Massimo Amato & Francesco Saraceno, 2022. "Squaring the circle: How to guarantee fiscal space and debt sustainability with a European Debt Agency," BAFFI CAREFIN Working Papers 22172, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    2. Massimo Amato & Francesco Saraceno, 2022. "Squaring the circle: How to guarantee fiscal space and debt sustainability with a European Debt Agency," Working Papers hal-03554212, HAL.
    3. Avgouleas, Emilios & Micossi, Stefano, 2021. "On selling sovereigns held by the ECB to the ESM: Institutional and economic policy implications," CEPS Papers 32673, Centre for European Policy Studies.
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