Daniel C. Hardy (Vienna University) at ESM Research Webinar

"ECB Debt Certificates: The European counterpart to US T-bills"

Abstract: The European counterpart to US T-bills. The euro is popular but its role in financial markets is limited. One reason for this weakness is the scarcity of euro-denominated liquid short-term safe instruments to serve as “near money” and high-quality collateral available to all—a role fulfilled by US Treasury bills in the US dollar financial “ecosystem.” It will be argued in the presentation 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. As will be shown, the initiative would be easy to implement and consistent with the monetary implementation framework. Establishing a market for debt certificates would pave the way for the introduction of European bonds. The main objections are likely to be political rather than economic.

Bio: Daniel C. Hardy was on the staff of the International Monetary Fund for most of his career to date. He contributed to macroeconomic and financial sector surveillance, Fund-supported programs, defining Fund policies, and technical assistance to help build financial sector frameworks and institutions in a wide range of industrialized, emerging market, and developing countries. Recently he led work on European financial integration and the banking union, debt management, and sovereign debt restructurings. He has undertaken research on such topics as cross-border policy coordination, credit market behaviour, and stress testing. He has also worked at the Austrian Financial Market Authority and the German Bundesbank. He studied at the universities of Oxford and Princeton.

Discussant: Andreja Lenarčič, ESM

This is an ESM research internal seminar. If you would like to attend, please write an email to ESMresearch@esm.europa.eu.