What to do by Paul Gillespie

1. Radically extend the ECB’s current liquidity easing into a quantitative easing. The bank’s existing exposure at €128 billion amounts to only 1.4 per cent of the EU’s GDP, tiny compared to the US Fed. This would reduce the euro’s high value.

2. Reach an EU agreement with Greece, Ireland, Portugal and Spain for a negotiated rescheduling of existing debt (including haircuts, debt-for-equity swaps, extension of term periods).

3. Give the proposed new, permanent, emergency financial facility powers to issue EU bonds and deploy high, collective EU credit rating on the markets. This could replace part or all of the national borrowing requirements, for example by taking the existing Stability and Growth Pact limit of 60 per cent state indebtedness on to the ECB’s books. Explore an innovative “deficit-easing” policy whereby the ECB creates money and gives it to governments in proportion to their populations (see smarttaxes.org/wp-content/uploads/2010/11/Douthwaite-Deficit-easing.pdf).

4. Demand an EU macroeconomic strategy switching from austerity and deflation politics to investment-led recovery prioritising sustainable energy, development and human infrastructure (see euromemo.eu).