• In yesterday’s Comment we explained how the ECB has ‘bailed out’ Italy by ignoring its own guidelines for public debt purchases under its various QE programs. Between May and July of this year, the ECB’s holdings of Italian debt increased by 12 billion euros, which was offset by allowing maturing public debt bonds issued in other member states to roll off the balance sheet. If we take a broader perspective and compare the ECB’s total Italian bond holdings to what it should have owned if it had stuck resolutely to the capital key, the ECB is now overweight Italy to the tune of 90 billion euros. Put differently, if the ECB had followed its own guideline since the inception of QE in 2015, the share of Italian public debt in the ECB’s total public debt holdings would be 17.0 percent and not the actual 19.3 percent.



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