The ECB is legally barred from financing government deficits or debt

Evidence

“Art 21.1 forbids the ECB to open [new] lines of credit to community or national public institutions, not even on a temporary basis. Th e same article bans the ECB from participating on the primary market for national government bonds” (Alesina and Grilli 1991, 14- 15). — Clara E. Mattei, The Capital Order, 1739

Categorization

• XREF: This is the institutional lock that prevents monetary financing of public deficits — connects to the modern debate over fiscal dominance and the Friedman/esoteric finance arguments. — connects to: The ECB lacks the lender-of-last-resort powers the Fed and Bank of England exercise — Mark Blyth, Austerity: The History of a Dangerous…, 246; ECB statutory limits and German elections, not economics, prevented an early cheap bailout. — Mark Blyth, Austerity: The History of a Dangerous…, 180; German ordoliberalism was exported to Europe via the ECB constitution and Euro rules — Mark Blyth, Austerity: The History of a Dangerous…, 375
• DEFINE: Clarifies what ‘central bank independence’ concretely means for the ECB: no credit to governments, no primary-market bond purchases.