ECB Europe Monetary Policy

Statement on the lawsuit against ECB QE program

The decision of the German constitutional court concerning the lawsuit against ECB QE program is a false compromise. The constitutional court signals that it considers the ECB QE program as a violation of European law and to constitute monetary financing. Yet the constitutional court is not willing to take a decision itself at this stage, but rather asks the European court of justice (ECJ) for “advice”.

I expect that the ECJ will again support the ECB, as it did with … [continue reading]

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Currency and Financial Markets Europe Monetary Policy

An Overwhelming Success for the European Central Bank

The decision by the European Court of Justice (ECJ) is an overwhelming success for the European Central Bank (ECB). The OMT program has been ruled to be fully consistent with European law. The ruling means that the ECB has an additional, important monetary policy instrument to fight the European crisis. It implies that the OMT program has not become superfluous with the start of the current QE program of the ECB. On the contrary, a Grexit and renewed intensification of … [continue reading]

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Economic Policy Europe Macroeconomics

Strong and Overwhelming Support for the ECB

Statement on the recommendation of the ECJ advocate general Cruz Villalón on bond purchasing of the ECB

The recommendation of the advocate general of the ECJ is an overwhelming success for the European Central Bank (ECB). Such a strong and overwhelming support for the ECB is surprising and could not have been expected. The decision finds the OMT program to constitute a legal instrument of monetary policy that pursues a legitimate objective. The recommendation is in clear contradiction to the … [continue reading]

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Currency and Financial Markets Economic Policy Europe Macroeconomics

Germany’s Pyrrhic Victory

This article was first published on Project Syndicate on 10 February 2014.

The German Constitutional Court has ruled against the European Central Bank’s pledge to buy potentially unlimited quantities of distressed eurozone countries’ government bonds, and has called on the European Court of Justice (ECJ) to confirm its decision. Until that happens, the “outright monetary transactions” (OMT) scheme is effectively dead, weakening the ECB’s ability to act as an effective and credible financial-market backstop at a time when European governments … [continue reading]

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Currency and Financial Markets Europe

Temporary End of the OMT Programme

The German Constitutional Court today declared that the OMT programme of the European Central Bank (ECB) constitutes a violation of European law, and asked the European Court of Justice to confirm its ruling. The curiosity is that the German Constitutional Court has no mandate to issue such a ruling on European law, as stressed by the two dissenting judges.

The ruling implies a temporary end to the OMT programme, as it would be highly controversial for the ECB to implement … [continue reading]

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