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Eurosystem debts, Greece, and the role of banknotes

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  • Whittaker, John

Abstract

The public debt of Greece to foreign governments, including debt to the EU/IMF loan facility and debt through the eurosystem, rose from €47.8bn to €180.5bn between January 2010 and September 2011. €17.1bn of the rise in eurosystem debt was due to an 86% increase in the Greek issue of euro banknotes. If EU/IMF loans to Greece cease, they will be replaced by larger Greek borrowing from the eurosystem, for as long as Greece stays in the euro. Eurozone governments would only escape from lending to Greece if access of the Bank of Greece to eurosystem credit were restricted. But this would impede the clearance of payments out of Greece, it would imply that cross-border payments by means of euro banknotes would also have to be restricted, and it would force Greece out of the euro.

Suggested Citation

  • Whittaker, John, 2011. "Eurosystem debts, Greece, and the role of banknotes," MPRA Paper 38406, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38406
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    File URL: https://mpra.ub.uni-muenchen.de/38406/1/MPRA_paper_38406.pdf
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    1. Whittaker, John, 2011. "Intra-eurosystem debts," MPRA Paper 38368, University Library of Munich, Germany.
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    Cited by:

    1. Cedric Durand & Sébastien Villemot, 2016. "Balance sheets after the EMU : an assessment of the redenomination risk," Documents de Travail de l'OFCE 2016-31, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. repec:hal:spmain:info:hdl:2441/7d576lom6n8up9mj8qdcmjnufl is not listed on IDEAS
    3. Sinn Hans-Werner, 2019. "Der Streit um die Targetsalden : Kommentar zu Martin Hellwigs Artikel „Target-Falle oder Empörungsfalle?“," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(3), pages 170-217, September.
    4. Karl Whelan, 2014. "TARGET2 and central bank balance sheets [The economics of TARGET2 balances]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(77), pages 79-137.
    5. Peter Burgold & Sebastian Voll, 2012. "Begrenzung von TARGET2-Risiken – ein kritischer Überblick," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13, pages 103-121, May.
    6. Whittaker, John, 2016. "Eurosystem debts do matter," MPRA Paper 69235, University Library of Munich, Germany.
    7. Kleczka, Mitja, 2015. "Monetary Policy, Fiscal Policy, and Secular Stagnation at the Zero Lower Bound. A View on the Eurozone," MPRA Paper 67228, University Library of Munich, Germany.
    8. repec:spo:wpmain:info:hdl:2441/7d576lom6n8up9mj8qdcmjnufl is not listed on IDEAS
    9. Stephen Wright & Charmaine Portelli, 2018. "The True Size of the ECB: New Insights from National Central Bank Balance Sheets," Birkbeck Working Papers in Economics and Finance 1807, Birkbeck, Department of Economics, Mathematics & Statistics.
    10. Jakob Korbinian Eberl, 2016. "The Collateral Framework of the Eurosystem and Its Fiscal Implications," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 69.
    11. Georg Dettmann, 2014. "Determinants of Internal and External Imbalances within the Euro Area," Working Papers 01/2014, University of Verona, Department of Economics.
    12. Rösl, Gerhard & Seitz, Franz, 2022. "On the stabilizing role of cash for societies," IMFS Working Paper Series 167, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    13. Győrffy, Dóra, 2014. "Válság és válságkezelés Görögországban. A puha költségvetési korlát szerepe a gazdasági összeomlásban [Crisis and crisis management in Greece. The role of soft budget constraints in the economic co," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 27-52.
    14. Ricardo Lagos, 2013. "Moneyspots and Coexistence in the Pure Theory of Money: A Reply to Neil Wallace," Journal of Political Economy, University of Chicago Press, vol. 121(4), pages 796-801.
    15. David Blake, 2023. "Target2: The Silent Bailout System That Keeps the Euro Afloat," JRFM, MDPI, vol. 16(12), pages 1-126, December.

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    More about this item

    Keywords

    eurozone operations; TARGET2;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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