forum. For a long time, the public debt problem caused by the health crisis has been an issue in the French political debate. How to deal with “Covid debt”? The answer given in the Arthuis report is that it must be compensated by strengthening the control of public expenditures. There are other options on the table: complete cancellation, renewal after maturity, compensation through growth results, “restrictions” in the temporary structure, supplemented by taxes or savings generated by structural reforms.
Which option to choose? Despite the unprecedented nature of the health crisis, it is worth learning lessons from history. An example that dates back two centuries is instructive: the debts inherited by the British royal family from the Revolutionary War and the Napoleonic Wars in 1815.
This comparison is reasonable in the context of currency: starting in 1797, the gold convertibility of Bank of England banknotes was suspended, which allowed partial financing of the war through its issuance, because today the European Central Bank (ECB) publicly opposed Covid Support for the suspension of the Eurozone Stability Pact has allowed the plan to be implemented.
Monetization of debt is no longer determined by the British government (the Bank of England was privately owned at the time), and today for the eurozone countries, the independence of the European Central Bank is guaranteed by treaties.
Of course, there are important differences between these two eras. When England entered the war, the Bank of England was not a central bank, but a joint-stock company. The company was founded a century ago, with the purpose of allowing troubled royal financial institutions to borrow private capital in exchange for the monopoly of issuing bills within a 65-mile radius. city. The directors are convinced that this issue has no impact on currency values or overall economic activities and is managed at the discretion of the directors.