Nevertheless, the Eurosystem central banks have become the Member States’ biggest creditors – and that was the case even before the current crisis. For the part of sovereign debt that is on our books, funding costs are decoupled from the capital market. The interest on those bonds ﬂows to central banks, which distribute them back to their treasuries as part of their proﬁt.
We will need to closely monitor the increasingly divergent recovery paths – which may well entail an asynchronous unwinding of monetary and fiscal support measures – and take international policy spillovers into account. Avoiding unintended cliff effects calls for careful actions, first and foremost within each jurisdiction. Reducing policy support too soon could jeopardise the recovery, exacerbate social disruptions and, ultimately, prove self-defeating.