Can a central bank prevent self-fulfilling debt crises without creating a moral hazard problem? This paper examines this question by presenting a public debt model with self-fulfilling debt crises. In it, the central bank can prevent such self-fulfilling prophecies by announcing purchases of public debt that do not materialize at the equilibrium and that are credible even with imperfect or no commitment. However, a backstop policy creates a moral hazard problem. That is, the government may be tempted to increase its deficit because the central bank's policy of averting self-fulfilling debt crises reduces the probability of public debt repudiation and the associated costs […]