MNI BRIEF: ECB Tells MEPs Public Debt Cancellation Is Illegal

The cancellation of public debt by the ECB would violate the prohibition of monetary financing as laid down in Article 123 of the Treaty on the Functioning of the European Union, ECB President Christine Lagarde told MEPs in a letter published Friday. The ECB had already clarified its position in this regard during Lagarde's Nov. 19 hearing before the ECON Committee, the letter noted, but would not hesitate to do so again at a future scheduled event if required.

Earlier Friday, European Central Bank Vice President Luis de Guindos said the debate about debt cancellation was in itself detrimental and the whole idea made no "economical or financial" sense, adding that it would damage the reputation, credibility and independence of central banks if any of the debt they have purchased was cancelled.