Dr. Robert Sweeney:

Monetary policy already has a very large impact. Let us look at why countries like Spain and Greece have such large debt ratios to begin with. It is true that they underwent a crisis in the 2010s, the European sovereign debt crisis, but in Greece, the debt-to-GDP ratio and the deficit it ran in the 2000s were not that high by historical standards. Similarly, if one were to compare Spain and the UK in 2011 and 2012, they basically had similar levels of debt and deficit, but Spain eventually ended up with a severe sovereign debt crisis. Obviously, Spain had a housing bubble and Greece spent too much on the Olympics in the 2000s, but the main reason was that the ECB did not commit to buying bonds. In the 2010s, therefore, a lot of the accumulation of debt was such that Greek and Spanish bonds were considered very risky. There was a fear that those countries were going to default. When Mario Draghi made that famous speech in 2012 that the ECB would do "whatever it takes", bond yields fell precipitously immediately afterwards. That really helped the stabilisation of debts and deficits.

While it is the case that monetary policy is going to have a massive impact on the burden of servicing debt, it also has a very large impact on debts and deficits. There is a safeguard built into EU economic governance to prevent central banks, for example, enabling governments to spend money senselessly. We have to abide by the 2% inflation target, which is a bit of a safeguard against member states spending willy-nilly or senselessly. It absolutely is the case that if we move towards lowering the debt servicing burden, monetary policy will be very important but that is the case already.