The provision of the so-called “Helicopter money” has never been discussed by members of the European Central Bank (ECB). This is explained in a letter to MEP Philippe Lamberts, bu the President of the European Central Bank (ECB), Christine Lagarde.

“It should be noted that the term is related to a wide range of policy proposals. In many cases, these proposals do not fully address the related operational, accounting, and legal complexities, nor do they provide a comprehensive cost/benefit analysis of the overall economic and monetary impact”, stated Christine Lagarde.

The ECB has been a major source of stimulus for the Eurozone economy since the outbreak of the coronavirus crisis, but at the same time, the disputed EU Member States appear to be nearing agreement on using the common European long-term budget to resume economic growth.

Buying debt directly from Eurozone governments can undermine their legal obligations to keep a tight budgetary policy. This was stated in a letter to another Member of Parliament – Italian MEP Marco Zanni.

With the Central Bank of England already launching direct lending to the UK government, investors have begun speculating which other central banks will follow suit, as the world has been battling the worst recession in nearly a century.

Christine Lagarde’s response to the Italian MEP means that unlike other central banks, the ECB will not buy bonds directly from national governments and will remain a buyer in the secondary market, with plans to buy assets worth up to 1.1 trillion EUR this year, even if the bank it is now close to owning one-third of the debt bonds of countries such as Germany and Portugal.

In her letters, Christine Lagarde clearly outlines the “red line” that the ECB will not disrupt in the direct purchase of debt by euro area governments and “cold showers” the possibility of a policy known as “helicopter money” in terms of direct financing of households.