Infotech Thomas Piketty and a hundred economists call for the cancellation of public debts held by the ECB

Thomas Piketty and a hundred economists call for the cancellation of public debts held by the ECB

Faced with the health crisis and its economic consequences, more than 100 economists are launching this Friday, February 5, an appeal to cancel public debts held by the European Central Bank (ECB) to facilitate social and ecological reconstruction.

While public debt has risen 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”, note these economists in a forum in nine European publications, including “Le Monde”.

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“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 expenses ”, explain these economists, including 50 French, including Thomas Piketty (School of Economics of Paris), the former Belgian minister Paul Magnette and the former Hungarian European commissioner Andor Lazlo.

“Repair the social, economic and cultural damage”

For the ECB, canceling government debts, which are currently trading at very low or even negative rates, is not “Not an option”, because “Citizens would risk losing confidence in the currency”, declared in June Fabio Panetta, Italian member of its board.

The signatories believe on the contrary that the institution based in Frankfurt could, by canceling its debts “Offer European states the means for their ecological reconstruction, but also to repair the social, economic and cultural damage”.

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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 Belgique”, “Der Freitag” (Germany) and “l’Avvenire” (Italy).

A call for a “new European governance”

The signatories claim that “Cancellation is not explicitly prohibited by the European treaties” and “History has shown us many times that legal difficulties disappear before political agreements”.

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

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