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Reuters — ECB can’t go bankrupt even it suffers losses

Summary:
ECB President Christine Lagarde lets the cat out of the bag.“As the sole issuer of euro-denominated central bank money, the Eurosystem will always be able to generate additional liquidity as needed,” Lagarde said in response to a question by an Italian member of the European Parliament.“So, by the definition, it will neither go bankrupt nor run out of money. In addition to that, any financial losses, should they occur, would not impair our ability to seek and maintain price stability....Alan Greenspan testified to a congressional committee about the Fed's ability to do this, adding that the issue was availability of real resources rather than affordability…Some people still don't get it. They can't get beyond the idea of money being a"thing" and can't fathom the concept of money as

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ECB President Christine Lagarde lets the cat out of the bag.
“As the sole issuer of euro-denominated central bank money, the Eurosystem will always be able to generate additional liquidity as needed,” Lagarde said in response to a question by an Italian member of the European Parliament.

“So, by the definition, it will neither go bankrupt nor run out of money. In addition to that, any financial losses, should they occur, would not impair our ability to seek and maintain price stability....
Alan Greenspan testified to a congressional committee about the Fed's ability to do this, adding that the issue was availability of real resources rather than affordability…

Some people still don't get it. They can't get beyond the idea of money being a"thing" and can't fathom the concept of money as entries on a spreadsheet, now a digital spreadsheet and created merely by stroking a keyboard.

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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