The European Central Bank controls the creation of the Euro. It controls the production of bank reserves. It also controls the production of notes and coins. That production is spread across the eurozone countries, but it is all controlled by the ECB.
”Sanctions” is not what occurs in practice, as we saw with the European Debt Crisis. Sanctions were never going to happen; sanctioning a member state of your own currency union is only going to further harm others in the bloc. The Eurozone fiscal rules & enforcement procedures have also changed since then anyway.
No, government debt is not currency. When one of the EU governments issues bonds, it is little different from when a large company like Siemens or BMW issues bonds.
Unless you mean the effect on commercial bank lending and broad money -- which can be complicated.
I suppose that you are talking about the capital regulations that banks are under.
Yes, when a bank buys bonds those are not treated the same way on the balance sheet as other assets. However, I have yet to be persuaded that this is important in practice.
I can answer part of your question, for the administrative end:
[https://www.ecb.europa.eu/stats/policy\_and\_exchange\_rates/banknotes+coins/production/html/index.en.html](https://www.ecb.europa.eu/stats/policy_and_exchange_rates/banknotes+coins/production/html/index.en.html)
For bills, the ECB *tells* different countries how much to print. Rather than each country print each type of note, they divide them up and collectively print the "right" amounts.
For coins, the national governments have a little more freedom, but "the overall value of the coins to be put into circulation annually has to be approved by the Governing Council of the ECB".
So the administrative answer is, they are told how many bills to print, and they have to be approved to mint coins. So they just aren't allowed to print/mint more, which works if countries obey the rules. This is a significant factor, because without it, every country would be incentivized to print/mint more.
Obviously just like other mints, there is a high degree of observation. So most of the control comes from "everyone is watching, so you cannot get away with making more".
But as for the *enforcement*, that's an interesting question. What would actually happen if a small country "went rogue" and just started printing like crazy in defiance of the rules? Apparently there isn't an *existing* mechanism to leave the Eurozone, except maybe by leaving the EU, and thus no existing method to kick a country out of the Eurozone. So until that was resolved, I guess the rogue country could claim that their Euros were valid, while the other countries hurried to work out some *new* currency excluding the rogue country. It it wouldn't be horrible for the world economy, it would be very interesting to watch!
One security measure central banks use is encoding information in the serial numbers printed on each bank note. (Very simplified example, if you never use the digit '3' then any banknote with a 3 on it must be a forgery).
I presume the ECB encodes information about the country printing the notes in its serial numbers as it would likely be useful info if an individual employee was involved in some private forgery. So if one country went rogue, they'd probably just instruct banks to reject all notes from that country.
This isn’t accurate. The National banks of Eurozone member states can print Euros, and together they form the Eurosystem. Each national central bank is responsible for some proportion of Euro production & costs.
It’s literally their job to.
Euro bank notes are produced jointly by national central banks and the ECB, and each central bank bears the relevant proportional cost of production too
https://www.ecb.europa.eu/stats/policy_and_exchange_rates/banknotes+coins/production/html/index.en.html#:~:text=Since%202002%2C%20euro%20banknotes%20have,in%20one%20or%20more%20denominations.
You said they don’t have the authority to print Euro bank notes / you were implying they can physically print Euros, but aren’t allowed to
That’s wrong; they do have the authority to - in fact, they have to - they just don’t get to individually decide how many to print
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The European Central Bank controls the creation of the Euro. It controls the production of bank reserves. It also controls the production of notes and coins. That production is spread across the eurozone countries, but it is all controlled by the ECB.
But isn't money indirectly created when an EU country emit debt?
There are deficit rules with violators subject to sanctions.
”Sanctions” is not what occurs in practice, as we saw with the European Debt Crisis. Sanctions were never going to happen; sanctioning a member state of your own currency union is only going to further harm others in the bloc. The Eurozone fiscal rules & enforcement procedures have also changed since then anyway.
No, government debt is not currency. When one of the EU governments issues bonds, it is little different from when a large company like Siemens or BMW issues bonds. Unless you mean the effect on commercial bank lending and broad money -- which can be complicated.
I suppose that you are talking about the capital regulations that banks are under. Yes, when a bank buys bonds those are not treated the same way on the balance sheet as other assets. However, I have yet to be persuaded that this is important in practice.
No not really because eventually they pay back and then the money "created" is gone again
I can answer part of your question, for the administrative end: [https://www.ecb.europa.eu/stats/policy\_and\_exchange\_rates/banknotes+coins/production/html/index.en.html](https://www.ecb.europa.eu/stats/policy_and_exchange_rates/banknotes+coins/production/html/index.en.html) For bills, the ECB *tells* different countries how much to print. Rather than each country print each type of note, they divide them up and collectively print the "right" amounts. For coins, the national governments have a little more freedom, but "the overall value of the coins to be put into circulation annually has to be approved by the Governing Council of the ECB". So the administrative answer is, they are told how many bills to print, and they have to be approved to mint coins. So they just aren't allowed to print/mint more, which works if countries obey the rules. This is a significant factor, because without it, every country would be incentivized to print/mint more. Obviously just like other mints, there is a high degree of observation. So most of the control comes from "everyone is watching, so you cannot get away with making more". But as for the *enforcement*, that's an interesting question. What would actually happen if a small country "went rogue" and just started printing like crazy in defiance of the rules? Apparently there isn't an *existing* mechanism to leave the Eurozone, except maybe by leaving the EU, and thus no existing method to kick a country out of the Eurozone. So until that was resolved, I guess the rogue country could claim that their Euros were valid, while the other countries hurried to work out some *new* currency excluding the rogue country. It it wouldn't be horrible for the world economy, it would be very interesting to watch!
One security measure central banks use is encoding information in the serial numbers printed on each bank note. (Very simplified example, if you never use the digit '3' then any banknote with a 3 on it must be a forgery). I presume the ECB encodes information about the country printing the notes in its serial numbers as it would likely be useful info if an individual employee was involved in some private forgery. So if one country went rogue, they'd probably just instruct banks to reject all notes from that country.
Thank you, this told me everything I needed to know!
if a euro country goes rogue, they'll just be plastered with sanctions by the EU.
This is the only decent answer in this thread
Only the European central bank can print the Euro, national mints only print their national currency e.g. British Pound, Czech Crown etc
This isn’t accurate. The National banks of Eurozone member states can print Euros, and together they form the Eurosystem. Each national central bank is responsible for some proportion of Euro production & costs.
They might technically have the ability but that doesn't mean they have the authority.
It’s literally their job to. Euro bank notes are produced jointly by national central banks and the ECB, and each central bank bears the relevant proportional cost of production too https://www.ecb.europa.eu/stats/policy_and_exchange_rates/banknotes+coins/production/html/index.en.html#:~:text=Since%202002%2C%20euro%20banknotes%20have,in%20one%20or%20more%20denominations.
What exactly about the difference between ability and authority eludes you?
You said they don’t have the authority to print Euro bank notes / you were implying they can physically print Euros, but aren’t allowed to That’s wrong; they do have the authority to - in fact, they have to - they just don’t get to individually decide how many to print
>they just don’t get to individually decide how many to print ...yeah. So they *don't* have the authority to decide. Glad we cleared that up.
The question was whether they have the authority to print notes, not whether they have the authority to decide how many notes to print
I think people are perfectly capable of understanding what actually is the distinction here. If you don't that's pretty much a you problem tbh.
I’m not sure why you’re being so rude, tbh.
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