Must the public debt be repaid?

The debate over the euro-zone countries’ public debt and fiscal solvency is very muddled. So i t is important to bear in mind a few basic mechanisms: If the ECB never reduces the size of its balance sheet ( i.e. rolls over the government bonds it holds when they reach maturity ) , the governments will never have to repay their bonds held by the ECB. In this case, fiscal solvency can be calculated on the basis of the share of the public debt that is not held by the ECB; In a situation of very low long-term and very-long-term interest rates, a government can use public debt to finance efficient investments (provided it knows how to pick them) or very-long-term investments, even if this debt is not monetised by the ECB; It will be necessary to reduce fiscal deficits ( the share of deficits that does not finance efficient investments ) , when the ECB stops buying new public sector bonds, which will also drive up long-term interest rates and will therefore make it harder to finance long-term investments. This suggests governments should rapidly carry out the long-term public investment they deem necessary .