A central bank buying up federal bonds to drive down the long-term risk-free interest rate with a view to speeding up inflation is a different kettle of fish from one acting as a lender of last resort to governments. And this brings me to the issue 3/7  BIS central bankers' speeches  debated in today’s second panel: "Who is willing to act?
Passing on the hot potato of policy intervention." Economists like Paul de Grauwe7 argue that monetary policymakers should channel their inner Bagehot when it comes to sovereign debt. In his view, a sovereign that is actually solvent but suddenly falls prey to the sceptical gaze of the market can be driven into insolvency by the rising interest burden.