Mark Carney, the Bank’s Governor, has said that he could “not envision any circumstance” in which an advanced economy central bank should finance government deficits.
Which is interesting, isn’t it?
And this is even better:
Buying the instruments directly from the state is illegal under Article 123 of the Lisbon Treaty. Richard Murphy, who Mr Corbyn has named as the architect of People’s QE, has proposed “a ruse” in order that the Labourite’s plans not attract the ire of EU lawmakers.
“The bonds have to be sold into the financial markets first, but there is no reason at all why this could not be for an agreed fee akin to underwriting, after which the bonds are, indeed purchased by the Bank,” he has said.
Mr Murphy said that Article 123 was clearly a piece of legislation whose “sell-by date had passed”, and that some fiddle would be required to get around it. But the EU may not look kindly on attempts to bypass its rules.
Simon Gleeson, a partner at Clifford Chance, said that the ECJ tended to be “quite hot on things that are a deliberately constructed ruse”. He said that such a scheme is “exactly and precisely what Article 123 is meant to stop”.
“There’s a lot of experience at the European level with member states coming up with clever arguments to get around the Treaties, and the ECJ takes quite seriously its role as the guardian of those Treaties,” he added.
A European court, unlike an English counterpart, is far more likely to object based on the spirit of the law, rather than a literal interpretation, Mr Gleeson explained.
So what does “Mr. we’ve all got to obey the spirit of the law” have to say about that?