This type of swap would ensure that the full authority and responsibility for fiscal matters remained with the Treasury and Congress and the Fed’s balance sheet remained essentially all Treasuries. Congress has mandated the goals of monetary policy to promote price stability, maximum employment, and moderate long-term interest rates.
Asking monetary policy to take on ever more fiscal responsibilities undermines the discipline of the fiscal authorities and the independence of the central bank. Central banks and monetary policy are not and cannot be real solutions to the unsustainable fiscal paths many countries currently face. The only real answer rests with the fiscal authorities’ ability to develop credible commitments to sustainable fiscal paths.