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I think the bundesbank here is acting here as a service provider, specially as a broker for the debt agency. Because they have more experience in the secondary markets. Since they are handling only the money of the federal republic in trust, the treaty isn't violated.
by IM on Wed Nov 23rd, 2011 at 09:38:13 AM EST
So the Finanzagentur retains ownership of the 2.4bn in unauctioned bonds, but the Bundesbank in pursuit of its monetary policy can decide to sell them in the secondary market at its own discretion, crediting the Treasury with the proceeds?

Does this mean that the amount of German government debt is determined at the margin at the discretion of the Bundesbank? That is, today the debt increased by 3.6bn but the Bundesbank can decide at its discretion to increase that to up to 6bn?

Or does the government itself hold its own bonds without cancelling them (so, the debt increased by 6bn today and the Finanzagentur which is part of the government holds 2.4bn of that - and the Bundesbank is allowed to sell them for cash in pursiut of monetary policy)?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Carrie (migeru at eurotrib dot com) on Wed Nov 23rd, 2011 at 09:47:08 AM EST
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As I say above, I assumed wrong and the Bundesbank is not involved at all.
by IM on Wed Nov 23rd, 2011 at 11:42:09 AM EST
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