El centro europeo de investigación ZEW ve “altamente desproporcionada” la adquisición de bonos de los países del Sur y cuestiona su legalidad.

El llamado Centro Europeo de Investigación ZEW es un servicio de estudios líder de referencia económica en Alemania y en la Unión Europea. Nació en 1990 de la colaboración público privada del estado de Baden-Württemberg y la Universidad de Manheim y su misión investigadora es “un funcionamiento óptimo en el diseño de los mercados y las instituciones europeas”. A continuación sus dos notas de prensa y el estudio

ECB Bond Purchase Programme Biased Towards Southern European Countries

Southern European countries profit in a disproportionate way from the bond-buying programme of the European Central Bank (ECB), with the largest bias towards Spain and Italy. Within the framework of the Public Sector Purchase Programme (PSPP), national central banks and the ECB have purchased Spanish and Italian government bonds whose volume exceeds Spain’s and Italy’s share in gross domestic product (GPD) by around 43 billion euros and 51 billion euros, respectively. If the ECB continues its bond-buying programme in 2018, this would further extend the preferential treatment of euro countries with high debt levels. These are the findings of a current quantitative analysis by the Centre for European Economic Research (ZEW) in Mannheim.

The analysis examines whether the ECB is in fact at risk of monetising government debt. To this end, the study analysed the distribution of bond purchases across the Eurozone and quantified the ratio of bond holdings to debt level as well as to euro countries’ current budget deficit. The findings show that government bonds purchased within the PSPP make up around 14.4 per cent of the Eurozone’s GDP, with the share of Spanish and Italian bonds amounting to 18.3 per cent and 17.7 per cent of their respective GDP.

Further countries that profit from the ECB’s bond purchase programme in a disproportionate are Portugal, France and Slovenia. In contrast, Greece, Cyprus and the Baltic States benefit the least. The reason why Spain and Italy are the main beneficiaries can, on the one hand, be found in their high public debt, since countries with a low debt level have a smaller stock of eligible bonds. On the other hand, Spain’s and Italy’s shares in the population of the euro area is greater than their contribution to the EU GDP. The allocation of ECB purchases is, however, determined equally on the basis of a country’s GDP as well as its population size.

“The fact that Spain and Italy are particularly favoured by the programme strengthens the suspicions that the main goal of quantitative easing measures is indeed the fiscal stabilisation of Southern Europe,” says Professor Friedrich Heinemann, head of the ZEW Research Department “Corporate Taxation and Public Finance” and author of the study. “What is particularly problematic is the fact that even those states with the highest deficits have been able to fully cover their budgets since 2015 through ECB’s bond purchases,” he explains.

What is more, the financing effects of the bond-buying programme are even greater than those of the euro rescue operations. The bonds held by the ECB and the national central banks – the latter assuming liability for 80 per cent of PSPP holdings – have already exceeded the volume of liquidity support measures provided to Portugal, Ireland and Spain via the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESB).

“In net terms, no single Eurozone country still needs any other lender to finance its deficits apart from the ECB,” concludes Heinemann, “the phasing out of the bond-buying programme is long overdue.” If the ECB continues its quantitative easing programme into 2018, the preferential treatment of highly indebted states would be further extended. “The apparent stabilisation of the euro bond markets currently depends entirely on a drip-feed from the ECB,” says Heinemann. “If the financing by the euro central banks stops, the Eurozone will be put to yet another test.”

Disproportionate Purchase of High-Debt Country Bonds Even Before the COVID-19 Crisis

Even before the coronavirus pandemic, Eurosystem central banks were increasingly buying disproportionately large amounts of bonds issued by highly indebted euro area countries. In addition, the rules of the purchase programmes have been continuously relaxed since 2015. These are the findings of a study on the ECB’s sovereign purchase programmes, conducted by researchers of ZEW Mannheim with the support of the Brigitte Strube Stiftung.

“The COVID-19 pandemic and the deepest recession in the post-war period are currently providing the ECB with convincing arguments for handling its new purchase programme PEPP very flexibly. At present, the outbreak of panic on the bond markets must be prevented by all means. However, this does not justify the fact that the old PSPP purchase programme had already increasingly violated its own rules by the end of 2019,” says Annika Havlik, co-author of the study and a researcher in the “Corporate Taxation and Public Finance” Department .

In a first step, the study examines how rules of the Public Sector Purchase Programme (PSPP) and the Pandemic Emergency Purchase Programme (PEPP) evolved over time. For the PEPP activated in March 2020, important rules of the PSPP were overridden on the grounds that the coronavirus-induced recession poses extraordinary challenges. But also for the PSPP, which started in 2015, it has been found that initially very strict limits had been increasingly become laxer even before the COVID-19 crisis. This applies, for example, to eligible issuers, maturity restrictions, yield restrictions, as well as issue and issuer limits that were still in force at the beginning of the PSPP. The rule that the Eurosystem shall base its allocation of bond purchases according to the euro country’s share in the ECB capital key was also increasingly relaxed.

In 2020, the PEPP led to a far-reaching relaxation of the remaining rules. The Eurosystem now even accepts the purchase of more than one third of all bonds issued by a single issuer, which gives the ECB a blocking minority in future creditor negotiations. “The ECB has accepted, at the latest with the PEPP, to assume the role of a strategic creditor for eurozone countries. In future, the Governing Council of the ECB will thus be involved in deciding whether or not a highly indebted euro state can restructure its bond liabilities,” comments co-author and ZEW research department head, Professor Friedrich Heinemann.

The empirical analysis shows that, even before the outbreak of the coronavirus pandemic, the allocation of bond purchases already deviated clearly from the capital key in favour of the highly indebted countries France, Belgium, Italy and Spain. For each of these four countries, the stock share held by the Eurosystem increasingly deviated from the ECB capital key between 2015 and 2019. This even contradicts the already relaxed PSPP rules, which still define the capital key as the relevant compass for accumulated stocks. Since the beginning of the coronavirus crisis, the disproportionate purchase of Spanish and Italian bonds has increased dramatically, even in the old PSPP programme, with Italy’s share of PSPP purchases between March and May exceeding the country’s capital key by 13 percentage points.

As a result of the growing asymmetry in the ECB’s bond purchases, the Eurosystem’s stock holdings have come to vary considerably relative to the countries’ economic sizes. While the Eurosystem already holds Italian bonds amounting to almost 25 per cent of Italy’s GDP in 2019, cumulated purchases of Dutch bonds, for example, are only about 15 per cent of the country’s GDP.

The study concludes that, before the current crisis, bond purchase programmes would have increasingly bordered on illicit monetary financing of governments. “Such large-scale and increasingly asymmetric government bond purchases by central banks in the eurozone may be justified in times of crisis, but they are no longer compatible with EU law once the coronavirus-induced recession is over. The ECB cannot and must not solve the problem of over-indebted euro states in the future,” concludes Friedrich Heinemann.