The so-called ZEW European Research Center is a leading economic benchmark research service in Germany and the European Union.

It was born in 1990 from the public-private collaboration of the state of Baden-Württemberg and the University of Manheim and its research mission is "an optimal operation in the design of European markets and institutions".

That is why the services of the German Parliament chaired by

Wolfgang Schäuble

include this alert study on the debt of, among others, Spain in the report that he has delivered this month to parliamentary groups on the actions of the European Central Bank (ECB), according to been able to check this diary.

The ZEW study maintains that the ECB is on the wire of legality with the purchases it is making in southern countries.

He titled it like this:

"The ECB's bond purchases of Italy and Spain are highly disproportionate."

It means that they far exceed what is appropriate based on the central bank's capital key.

In the case of Spain, it owns 9.7% of the capital, but the purchases of, for example, the so-called PEPP program, created to combat the pandemic, reach 90,000 million until the end of January and exceed 15,000 million what would be the official weight of the fourth euro economy in the ECB.

"Compared to the equity key, Italian government bonds were 25% overweight between March and September 2020. The overweight is 11% for Spain, 7% for Belgium and 3% for Slovenia and France" , according to the study.

And in subsequent figures this disproportion has been increasing.

The ECB already warned last March, in one of the most difficult decisions of the body chaired by

Christine Lagarde,

that it was willing to not respect the capital keys to help more the countries that needed it most.

It was successful, because it makes sense to overturn the lifeline in countries such as Italy and Spain that saw their risk premium skyrocket at the beginning of the pandemic due to the markets' prospect that they were going to lose solvency with the looming increase in public spending.

However, that moment of sympathy from the northern countries and the toughest members of the Governing Council of the ECB (fearful that the drift from the south would destabilize the euro) is going to fade as the bulk of the euro area start controlling the pandemic.

The appointment of

Mario Draghi

to the head of the Italian Government is a first reaction by Rome to this new stage that is approaching, but Spain has not yet reacted by announcing a more credible economic policy with greater parliamentary support.

Believing that the ECB is going to eternally buy the bulk of the Spanish debt as up to now without any conditions is unfeasible due to, among other factors, the judicial pressure that will be unleashed again in Germany against this oxygen.

One example is that one of the authors of the study, Professor

Friedrich Heinemann

, head of the public finance department of the ZEW, recalls that "purchases of sovereign bonds by central banks of the euro in this unbalanced way are barely covered by the EU legislation for the acute emergency of the coronavirus recession. "

Therefore, "in a normal economic situation, such a program would be a clear case of monetary state financing", which is strictly prohibited in the Treaty on European Union.

The ZEW believes that "

the bond purchase programs should end as soon as the coronavirus crisis ends."

The problem is who would have bought 90,000 million euros of debt from Spain, the economy that collapsed the most of the advanced countries in 2020, if it is not the ECB.

"For the European bond markets, the question remains how the highly indebted euro countries will be able to finance themselves again after the crisis without this massive indirect financial help from central banks," admits Heinemann.

The ECB buys sovereign bonds under two different programs.

In the still current PSPP (Public Sector Procurement Program), which has been running since 2015, the ECB's capital key is still a binding reference, although, according to the latest official data, it also exceeds that of countries such as Spain.

It accumulates 295,000 million in Spanish bonds, about 50,000 more than it would correspond.

The ZEW study also highlights this "surprising overweight" of Spain in this old program, where it was not expected to occur as in the new one, the aforementioned PEPP.

In this environment, it is clear how highly counterproductive it has been for the president of the PSOE,

Cristina Narbona

, and the Secretary of State for Social Rights and economic head of Podemos,

Nacho Álvarez

, to sign a manifesto requesting debt forgiveness to the ECB.

If it is already difficult for the Spanish and Italian members of the governing council of the European monetary authority to convince the rest in Frankfurt to maintain the purchase programs, their work is complicated if the Dutch or Austrian members read that the president of the PSOE wants not to return then the whole mountain of borrowed money.

The vice president

, Luis de Guindos

, and, above all, the governor of the Bank of Spain,

Pablo Hernández de Cos

, who is particularly a defender of generous purchase programs, will

not have it easy in the next debates

and more if the Government of

Mario Draghi

starts doing homework and that of

Pedro Sanchez

, no.

The Draghi effect calms down in Berlin, but it benefits Spain only if it knows how to take advantage of it and the Government does not go in the opposite direction to that of the new Italian prime minister, because it will be more exposed to the markets and the ECB itself.

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