16 July 2015

VoxEU：ECB（欧州中央銀行）は対ギリシャ債務の返済延期を容認するべき

At the end of 2014, the ECB’s holdings of Greek government bonds amounted to approximately €20 billion (Table 1). These bonds had an average remaining maturity of 3.5 years. On 20 July 2015, €3.5 billion of Greek government bonds are coming to maturity. The Greek government is supposed to repay these bonds to the ECB. As more of these bonds will come to maturity during the next three years, the Greek government will have to make repayments to the ECB until the Greek bonds disappear from the ECB’s balance sheet.

Does it make sense to insist that Greece repays the bonds held by the ECB now?

Table 1: Eurosystem SMP holdings (31 Dec 2014)

In order to answer this question, we have to go to the basics of central banking so as to understand what the implications are of government bond purchases and sales by the central bank. A good starting point is Pâris and Wyplosz (2014) and De Grauwe and Ji (2015).

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What should the ECB do?

It would be easy for the ECB to solve this problem. The easiest way would be to write off the Geek bonds. As we have argued earlier such a write-off has no fiscal implications. It means that the circular flow of interest from Greece to the ECB and back is discontinued. In contrast, the repayment of the bonds by Greece has fiscal implications and leads to transfers from Greece to the other member countries. This is quite a perverse transfer given the sorry state of the Greek public finances.

The easy solution is hard

There is a lot of resistance against the easy solution.

• First there is resistance in the ECB.

Like many central banks, it is concerned to show profits and a positive equity. These concerns, however, are misplaced and these profits and losses only have a life in the mind of accountants. Similarly, the equity position of the ECB has no real consequences and should not influence the ECB’s decision. The latter should be guided by concerns about price stability and financial stability.

• Second, there is also resistance against a write-off outside the ECB because such a write-off is associated with a loss that the taxpayers, especially the hard-working German taxpayer, will have to bear.

As we have shown, this loss is purely of an accounting nature. It does not affect the other member countries. It does not imply that German taxpayers will bear a higher tax bill.

Concluding remarks

Fears, when held strongly, become a reality. One has to take these into account. Therefore it is worth considering another solution. This would consist of the ECB extending the maturity of the Greek bonds. This would lead to exactly the same economic effects (although the accounting would be different). The Greek government would continue to pay interest to the ECB, which would then dutifully return these to the Greek government. Other countries would not be affected.

Both these solutions would prevent the perverse redistribution of seigniorage from Greece to the other member states.

Full article on VoxEU (with charts)

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