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

Ad van Riet

FinanzArchiv: Public Finance Analysis, 2020, vol. 76, issue 1, 57-99

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.

Keywords: Euro-area crisis; public-debt management; fiscal sustainability; financial re-pression; fiscal insurance; financial repression (search for similar items in EconPapers)
JEL-codes: E44 F36 G11 G28 H3 H63 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:doi:10.1628/fa-2019-0016

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DOI: 10.1628/fa-2019-0016

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