Droit et Économie - L'avenir de l'Union économique et monétaire : une perspective franco-allemande - 182

182 L'AVENIR DE L'UNION ÉCONOMIQUE ET MONÉTAIRE

properly purchased on the secondary markets, they deepen the debtor-creditor relationship between Member States and the central banks until the
Eurosystem holds one third of the outstanding public debt in the euro area.
In this way, the central banks have become the main creditors of the Member States which could have, in practice, a fundamental bearing on their
independence.77 In addition, it is doubtful whether the risk sharing model
of the PSPP would work in practice, once one of the Member States defaulted on its debt. The idea of transferring national risks to the NCB (and keeping at there) will only work as long as the creditability and the stability of
the Eurosystem as a whole are not at risk. With regard to the high volumes
of securities acquired, it is not clear that losses incurred by a NCB will not
threaten the credibility of all other participating institutions.

C. Different historical lessons in Germany and other EU countries
Twice in the course of the 20th century, the German experience has been
that excessive government deficits funded by direct credits from the central
bank destroyed the country's currency and accordingly, the wealth of many
people. In both cases, the central bank had acted as the financier of the
government and adopted a policy stance which led in the end to hyper-inflation. The inflations occurred after both World Wars, the first in 1923, the
second in the years from 1946 to 1948 when the country was in ruins and
the economic substance used up. The political consequences, however,
were drawn initially not by Germany but by the Allies in March 1948. They
decided to grant independence to the newly established central bank, then
the Bank deutscher Länder, and separated it thereby from the government.78
The model was vindicated nine years later, in 1957, by the German legislator,
when it adopted the law establishing the Deutsche Bundesbank (Bundesbankgesetz). It is interesting, however, that neither the statute of the Bank
deutscher Länder nor the Bundesbankgesetz prohibited monetary financing
of the public budget. To the contrary, the Bundesbank had the power to
grant direct credit to the federal government and other public bodies, on a
short-term basis and up to a limited amount (six billion Deutschmark in case
of the federal government).79 Exercising this power was a matter of
77. For a similarly critical view see GIANVITI, Relationship between exchange rate policy and monetary policy, in: COTTIER et al. (eds.), The rule of law in monetary affairs (2016), p. 545, 569; for a
different view in favor of quantitative easing see DE GRAUWE (note 29), p. 131 who identifies a
moral hazard risk only.
78. Militärregierung Deutschland, Amerikanisches Kontrollgebiet, Gesetz Nr. 60 Errichtung der
Bank deutscher Länder vom 1. März 1960, Article I (3) and identical provisions for the British
and French sectors.
79. Cf. § 20 of the Bundesbankgesetz of 26 July 1957, BGBl. I 1957, p. 745 as amended by the law
of 23 November 1967, BGBl. I 1967, p. 1157. The provision was repealed in 1994.

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