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The debate on the cancellation of public debts is gaining momentum in France

Posted on Dec 22 2020 at 17:21Updated 22 Dec. 2020 at 18:44

This is the debate of the moment among economists. Should we draw a line on the public debts contracted to fight against the consequences of Covid-19 and held by the European Central Bank (ECB)?

For Jezabel Couppey-Soubeyran, economist at the University of Nanterre, “Such an operation would prevent the snowball effect on the public debt over time. States will only be able to refinance their current debt if, in 8 or 10 years, rates remain close to zero. However, this implies that the ECB continues its asset purchases, which has detrimental consequences on the economy, such as an increase in wealth inequalities for example ”. And add: “The cancellation would not be harmful since the private creditors would not be affected”.

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