Are eurozone governments insolvent? That is a question the ECB appears to be asking in its latest monthly bulletin. A special section calculates eurozone average net government debt – debt minus governments’ financial assets – has hovered around 50 per cent of gross domestic product in the past decade and increased to 53.4 per cent last year. Those high figures, it concludes, “impl[y] that the financial assets held by governments do not constitute a sufficient buffer, especially as some of these assets are illiquid.” (emphasis ours)
Scary? Possibly, but the ECB does not say whether the position is any worse than elsewhere in the world. More crucially the financial assets of governments are only part of their total assets. “Ideally, it would also be interesting to measure government net worth,” the section says. “However, this is currently not feasible given the unavailability of data on government non-financial assets.” Quite right too – how would Greece ever put a value on the Acropolis?