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In this text by Carmen Reinhardt, there's the following sentence:

For Greece, Italy, Portugal, and Spain, public-sector debt must now also include the central bank’s sharply rising debts.

What does she mean by this? Isn't all public debt usually considered?

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    $\begingroup$ perhaps this might be useful (it's about public debt, from Eurostat). This is about the ECB (from Wikipedia) $\endgroup$ – user14471 Oct 4 '17 at 19:00
  • $\begingroup$ This is about Target2. $\endgroup$ – user14471 Oct 4 '17 at 19:10
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  • $\begingroup$ Hi, thanks for the info. However, wouldn't the Target2 be masking the liabilities of southern countries towards northern countries instead? $\endgroup$ – An old man in the sea. Oct 5 '17 at 11:13
  • $\begingroup$ Maybe I'm missing something, but usually liabilities is used in the sense of some debt. A liability of mine is a debt of mine, which must be later repaid to someone else. Here, you're seem to be using it in a somewhat different way... as if it's somehow a measure of risk. Anyway, thanks. ;) $\endgroup$ – An old man in the sea. Oct 5 '17 at 17:42
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There are a lot of potential definitions of "public debt," and differing statistical agencies use different ones. (They may have more specific names, such as "Federal debt held by the public.")

A lot of these definitions exclude debt held by the central bank, based on theoretical arguments that may or may not make sense. (These debt holdings would roughly correspond to the money supply, which is allegedly not "debt" according to some economists.)

Is any particular definition "correct"? It seems that the "correct" definition would be practically useful. However, as Professor Reinhart discovered the hard way (the "90% debt limit paper"), government debt levels (however defined) do not appear to offer much predictive power for economic outcomes. If this is indeed the case, why worry about what definition is used?

Arguing that ECB "debt" is meaningful implies a belief that the ECB can default on euro-denominated debts. It is very unclear how such an event can occur, other than in the context of a disorderly break up of the euro area. However, that would imply the end of the existence of the euro itself -- in which case, why care about euro-denominated debt values? It will all have to be defaulted on anyway.

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