The Eurosystem has become a commercial bank, except one without a credit assessment department or loss-absorption cushion

The Eurosystem is a commercial bank with no capital

Published on 22nd May 2023

The Eurosystem has expanded its operations well beyond what a central bank would have traditionally undertaken. It now owns assets that are not ‘central bank money’ definitionally. Assets have credit ratings as low as BB in the Standard and Poor’s system, which means […]

Will EU/UK MoU on financial services regulation address EU’s systemic breach of regulation?

Bruges Group blog on EU breaches of regulation

Published on 18th May 2023

You will have seen that the EU and UK just announced a Memorandum of Understanding on regulatory matters to do with financial services: issues in my book – ‘The shadow liabilities of EU Member States, and the threat they pose to global financial stability’ […]

TARGET2 harbours risks even greater than the enormous ones acknowledged by the European Central Bank

TARGET2 imblances are double what the ECB reports

Published on 12th May 2023

There has been long and ongoing debate about the nature of the sizeable loans and deposits that the Eurozone national central banks (NCBs) run with one another within the TARGET2 payment system. The debate has overlooked that the balances are nearly double what the […]

The European Central Bank’s programmes have created a major funding risk for Eurozone member states

ECB programmes have created a major risk for Eurozone member states

Published on 11th May 2023

The programmes of the European Central Bank (ECB) are extensive, and involve greater risks than the ECB can bear, it being very thinly capitalized. Even modest losses on its programmes would require it to be recapitalized by its Eurozone shareholders – […]

Net Zero is the rationale for the European Investment Bank to help manufacture enormous public sector liabilities

Net Zero is a perfect cover story for the EIB and EIF

Published on 25th April 2023

Net Zero is proving to be a good cover story for the European Investment Bank Group to create huge financial liabilities for the EU taxpayer. The amount looks set to exceed €1.2 trillion by the end of the current EU […]

Misleading accounting lends undeserved credibility to the European Stability Mechanism

Misleading account at the European Stability Mechanism

Published on 24th April 2023

The European Stability Mechanism is the main bailout mechanism behind the euro. Croatia recently joined it upon adopting the euro. The ESM uses two accounting tricks to make it appear larger and more robust than it actually is, disguising that it lacks the firepower to […]

EU supranational entities harbour major unacknowledged liabilities for member states

EU supranationals harbour major risks for member states

Published on 21st April 2023

The structures of the EU and Eurozone have allowed the creation of a series of supranational entities that have taken on debts whilst having little financial strength of their own: their creditworthiness depends on guarantees or capital calls from member states, without the extent […]

Public credit rating agencies discriminate against the UK and in favour of EU/Eurozone member states

Rating agencies discriminate against the UK

Published on 18th April 2023

Public credit rating agencies have not been even-handed in their treatment of the UK compared to EU member states, given the large shadow debts and contingent liabilities that weigh on the latter.

This is explained in the newly-released book ‘The shadow liabilities of EU Member States, and […]

Scope of EU and Eurozone debts is unrecognised by public credit rating agencies

Public credit rating agencies over-rate EU issuers

Published on 16th April 2023

The public credit ratings of EU/Eurozone member states are inflated, because the credit rating agencies have not factored in the significant shadow debts and other financial liabilities bearing down on the respective member state’s debt service capacity. Total financial liabilities are much higher than these […]

Germany cannot pay totality of EU/Eurozone debts, contrary to assumptions of global debt markets

Germany cannot afford all the EU/Eurozone debts

Published on 15th April 2023

Global debt markets appear comfortable to absorb all of the bonds issued by the European Union for its €750 billion Coronavirus Recovery Fund on the basis that ‘it all tracks back onto Germany’. This is true: the guarantee structure behind the EU’s debts makes each […]