ECB debt certificates: The European counterpart to US T-bills

Working paper

The role of the euro in financial markets is limited by the scarcity of eurodenominated liquid short-term safe instruments to serve as “near money” and high-quality collateral—a role fulfilled by US Treasury bills in the US dollar financial “ecosystem.” It is argued that the ECB could eliminate this scarcity by issuing a large volume of its own debt certificates, and thereby expand and stabilize demand for the euro. The initiative is shown to be easy to implement and consistent with the monetary implementation framework. The main objections are likely to be political rather than economic.

Authors: Hardy, DC

• Publication status: Published
• Publisher: University of Oxford
• Article number: 913
• Series: Department of Economics Discussion Paper Series
• Publication date: 2020-07-01
• Paper number: 913
• Language: English