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ECB's de Guindos says debt cancellation forbidden

FILE PHOTO: Vice-President of the European Central Bank (ECB) Luis de Guindos gives a statement during the second day of the Informal Meeting of EU Ministers for Economics and Financial Affairs in Berlin, Germany September 12, 2020. Odd Andersen/Pool via REUTERS

FRANKFURT (Reuters) - There is no legal basis for the European Central Bank to cancel the government debt it owns, ECB vice-president Luis de Guindos said on Monday.

De Guindos was responding to comments by the President of the European Parliament, David Sassoli, who had said debt cancellation was “an interesting working hypothesis”.

“Article 123 of the Treaty says monetary financing by the ECB is forbidden,” de Guindos said during an interview with Italian TV network Sky. “There is no legal basis for debt cancellation,” he added.

The ECB has bought around 3 trillion euros (£2.7 trillion) worth of public-sector bonds over the past five years in an attempt to boost inflation in the euro zone and, more recently, keep credit cheap in the face of the coronavirus pandemic.

Reporting By Francesco Canepa; Editing by Balazs Koranyi

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