The European Central Bank will consider its potential role in the bloc's plans to increase defense spending, according to policymaker Robert Holzmann.
The European Union is working on a joint initiative to raise defense spending by €800 billion as it seeks to enhance regional security and support Ukraine, particularly as the United States signals a potential reduction in military support.
When asked if the ECB could finance defense spending through bond purchases, Holzmann mentioned that the topic had not been formally discussed, although it was referenced. In response to a follow-up question about the timeline for such discussions, he stated that they would occur in the future without providing a specific timeframe.
The ECB has previously employed various bond-buying programs to manage government borrowing costs during the eurozone debt crisis and the COVID-19 pandemic. Recently, ECB President Christine Lagarde minimized the likelihood of the bank directly participating in the financing effort, clarifying that it was not the ECB's intended role.
The European Parliament has also approved a significant spending plan, which includes modifying constitutionally established borrowing rules to facilitate a rapid increase in defense expenditures. This expected rise in borrowing has led to a sharp increase in European government borrowing costs this month.