Natixis - Why was there no desire to monetise public debt in the euro zone in the past?

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Natixis

Patrick Artus

Why was there no desire to monetise public debt in the euro zone in the past?

Even though there is officially no monetisation of public debt in the euro zone, there has de facto been monetisation since 2015. Why was monetisation of public debt rejected in the past? Because it was believed that it would lead to inflation in the medium term; Because it was feared that there was a moral hazard that would cause governments to never correct fiscal deficits; Because it was understood - which no longer seems to be the case - that distortions in asset prices (bonds, equities, real estate) were dangerous from a macroeconomic and microeconomic viewpoint.

24/06/2020 5 EN

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Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

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Analysts

Patrick Artus

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Why was there no desire to monetise public debt in the euro zone in the past?

Long Bono 01/41 vs. Short Bund 05/41

Overview of the Asian covered bond market

Consolidation after the euphoria?

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