090709 Gardiner re government borrowing

Gang

See the following

http://europa.eu/eur-lex/en/treaties/selected/livre223.html#anArt1

This I have to admit was news to me. I assume that the ban on EU governments borrowing from central banks got into EU law because it was one of the rules of the Bundesbank. It is also a rule in Switzerland. Effectively it prevents government debt being used as the backing for money. Elaborate means have to be used to get around the ban.

But the Bank of England now has wads of gilts as a result of 'Quantitative Easing' and how can one see this except as government borrowing from the central bank? No wonder Trichet is getting edgy.

Geoffrey