After the end of the Covid-19 pandemic, both the Commission and the governments of the euro area member countries will face thorny problems in their management such as dealing with the growing debt, public and private respectively, which is currently accumulating with the help of the ECB and the member countries that “absorb” it to show it later in their macroeconomic indicators.<\/p>\n
by Thanos S. Chonthrogiannis<\/strong><\/p>\n \u00a9<\/em>The law of intellectual property is prohibited in any way unlawful use\/appropriation of this article, with heavy civil and criminal penalties for the infringer.<\/em><\/p>\n According to the latest Q32020 figures, around \u20ac587bn of loans were suspended in the Eurozone, of which around 60% were business. In the current period, the amount of loan arrears in the euro area member countries on average does not exceed 3.5% of all loans except for Greece, which reaches 35.8%.<\/p>\n As economic shutdowns continue at a recurring pace, both public and private debt will increase as euro area member countries borrow from the ECB through the purchase of the government bonds of euro area member countries by the ECB and then the governments of the member countries direct them through government subsidies to private sector enterprises which then do not use them for productive investments that would in other circumstances create new jobs but towards repayment of current costs and servicing their existing debts.<\/p>\n The fact that restoring and restoring normality will trigger a tsunami of business bankruptcies will require additional borrowing from member countries to support workers who lose their jobs.<\/p>\n Public debt reaches astronomical heights. Proposals such as ‘debt write-off’ should not be put forward, particularly the debt write-off that you withhold from the ECB, because this is prohibited by the EU Treaty, which prohibits monetary financing of debt.<\/p>\n It is a one-way street for the governments of the euro area member countries to either impose taxes or drastically reduce public spending or combine both fiscal policies to get back into fiscal balance while reducing their debts.<\/p>\n On the other hand, the strength of the blow caused by a debt write-off would be enormous in terms of the credibility of future transactions.<\/p>\n If the cost of debt write-off is borne by the central banks of the member countries themselves then these costs will be transferred to the budgets of the euro area member countries.<\/p>\n