The European Central Bank may masse government bonds from euro-crisis countries Buy – under certain conditions. The so-called OMT program is in principle compatible with the European Treaties, according to an expert on EU court.
Can the European Central Bank to buy government bonds or not? The tentative answer: Yes, but. The ECB should not get a free hand in its program to buy government bonds from euro-crisis countries.
backing for the crisis of politics ECB chief Mario Draghi, there is Pedro Cruz Villalon of Advocate General. According to the influential expert on EU Court of Justice, the 2012, is required in view gestellteOMT program and proportionate in the narrower sense, as the ECB eingehe no risk they necessarily expose a scenario of bankruptcy. The stated Vilalon on Wednesday in Luxembourg. Precondition is, however, that the ECB is doing follow certain rules.
Off reform programs keep out
So should not finance the budgets of the euro countries with the printing press, the central bank with such measures (do not monetary financing) and must comply with the principle of proportionality. Their actions it must give reasons exactly. In addition, the ECB must stay out of the provisions applicable to an affected state reform programs
The report is considered preliminary, a judgment of the European Court of Justice (ECJ) is expected in autumn
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According to the expert, the ECB can achieve with the purchase of government bonds of troubled euro-zone countries quite a goal of their monetary policy. The ECB could thus reduce the spreads on these bonds, which the states could play “some financial normality”.
If the ECB were actually apply the OMT program, they should do so in the circumstances of the time, “the actual formation of a market price for the government debt enable” warns the expert. He says the ECB also to a wide discretion in their actions. The courts must make the ECB’s control activities “with a significant degree of restraint”.
Opinion of the Advocate General trendsetting
The ECB is in countries like Greece part of the so-called troika of the European Commission and the International Monetary Fund, which is responsible for monitoring the reform requirements. Concerning limitation of bond purchase programs of the ECB Cruz Villalon said during the reading of his Opinion anything. His assessment is for the judge at the European Court of Justice not binding, but in many cases they follow the argument.
In the present case involved an action brought against the ECB announcement in the summer of 2012 , if necessary indefinitely to buy government bonds of crisis countries (AZ: C-62/14), condition for the so-called OMT program (“Outright Monetary Transactions”) In practice, the ECB has not been used this OMT program – Only the announcement. enough to offset the euro crisis.
The plaintiff had the CSU politician Peter Gauweiler, former Justice Minister Herta Däubler-Gmelin (SPD), the Parliamentary Group of the Left and the association “More Democracy”. Nearly 12,000 other applicants joined in
backing at the right time
The Federal Constitutional Court came in February 2014 at the conclusion that the ECB had exceeded its powers with the OMT decision. The ECB should according to the operate European treaties no independent economic policy. In addition, the Constitutional Court was of the opinion of the OMT Order infringes the prohibition of co-financing of state budgets. Karlsruhe was the theme for clarification to the ECJ.
The back cover is for the ECB at an important time. Next week, the Governing Council may decide on new anti-crisis measures.
“Today’s decision by the ECB has strengthened the back. Nevertheless, it is no victory without conceding a goal, “says Daniel Lenz, chief market strategist EMU government bonds of DZ Bank, said in a statement. “The Advocate General makes it clear that the ECB needs to justify the use of OMT good and detailed.” Furthermore, the question whether the restrictions make the familiar Troika approach to planning agency. “It is possible that the ECB needs to retire under the program to a greater extent from their fiscal oversight.”
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ECB is in the right confirmed
The European Central Bank sees her controversial OMT program for potential purchase of government bonds by the statements made by the Advocate General in Luxembourg confirmed. “This is an important milestone,” said ECB executive board member Ives Mersch on Wednesday in Frankfurt. “We welcome the legal opinion of the Attorney-General of the European Court of Justice in Case OMT.”
This method will be made later with the verdict. In the meantime, the OMT stood but available. “We are still convinced that the OMTs are grounded in law and our mandate are in line,” added Mersch. All decisions of the Governing Council being rooted in the mandate to ensure price stability as well as limited. The Governing Council will abide by and respect the EU law.
“Yes” to government bond purchases sends euro plummeting
The backing for the euro bailout of the ECB by the Advocate General at the European Court of Justice sends the common currency is plummeting. The euro fell on Wednesday on a fresh nine-year low of $ 1.1726.
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