Lest our readers might consider that our seemingly disparate range of monthly topics are randomly chosen, we summarise below how our newsletters attempt to form a pattern enabling some overall analysis of ECB thinking to be deduced. We see increasing parallels between the ECB/ Eurosystem’s approach to creative accounting and masking of its debts, and the banking system’s use of financial engineering to conceal exposures in off balance sheet vehicles.
Public debt in the whole world keeps growing. As recently reported in “A Mountain of Debt: Navigating the Legacy of the Pandemic” and “The Aftermath of Debt Surges”, it is just the last “debt wave” in a long-established tendency. Yet, the rise has accelerated during the Covid-19 Pandemic: during 2020, public debt increased by 16 percentage points to 120% of GDP in the advanced economies, and by 13 percentage points to 97% of GDP globally. What are the possible ways out?