The term is often used to define different processes. The most « pure » definition, theoretically speaking, is as follows: debt monetization occurs when a government directly prints money for its financial needs rather than borrowing or issuing debt on the market as it would « normally » do. The term is also often used by extension (incorrectly, according to Patrick Artus here) to describe the purchase of public debt by the central bank with a view (or not) to financing the government.
In a fiat money system, this solution can be very tempting for a government, as it directly improves its short-term financing conditions without the need for structural reforms. However, this « solution » can cause very serious inflationary problems if used unreasonably (as evidenced by recent experience in Zimbabwe and Germany in the 1920s).
J. P.
