Think about it: if Spain can do this why can’t the UK issue £20 billion of new UK debt to a new National Investment Bank in exchange for equity with the National Investment Bank then using those UK bonds as collateral for ECB cash at 1%.
If the EU can allow this to fund a failed bank to clear bad property debts why not to fund a new bank to create jobs?
Any takers anyone?
Err, yes. Although pendants will note that the UK is not in the eurozone. Thus gilts, bonds issued by the UK, are not on the eligible list of ECB collateral.
There are other problems with the idea as well but this one seems reasonably serious.