Managing High Public Debt in Euro-Area Countries: Financial Repression as Fiscal Insurance?

Author(s): 
Publication Date: 
02 March 2020
Publisher: 
Mohr Siebeck GmbH & Co. KG
Publication Place: 
Tübingen
Publication Language: 
EN
Appearing in: 
FinanzArchiv (FA)
Volume: 
1
Issue: 
76
Pages: 
57-99
DOI: 
10.1628/fa-2019-0016
Abstract: 

This article gives a narrative account of the main standard and nonstandard public-debt management tactics that euro-area governments applied during the sovereign-debt crisis. To secure market liquidity, they inter alia targeted public-debt supply more at residents and often also sought to create a captive domestic demand for sovereign bonds. Where fiscal solvency was impaired, they arranged a »voluntary« debt restructuring, pressed official creditors for debt forgiveness, or considered imposing a haircut on official-sector claims. This cross-country analysis indicates the return of financial repression as fiscal insurance against government funding stress and a public-debt overhang.