Can Be European Central Bank Wrong? - the OTM Program

• Autorzy: Krzysztof Jerzy Gruszczyński

Warianty tytułu

Czy Europejski Bank Centralny może się mylić? - program skupu obligacji państw strefy euro

• Języki publikacji: EN

Abstrakty

EN

In February 2014 the German Federal Constitutionla Court decided to ask the Court of Justice of European Union whether Artt. 119 and 127 of the TFEU and Artt. 17 to 24 of the Protocol on the Statute of European System of Central Banks /European Central Bank can be interpreted in such a way that the adoption and the implementation of the Outright Monetary Transaction (OMT) program would be deemed in conformity with European Union law. In the German Constitutional Court's view, the OMT program is not covered by the monetary policy mandate of the ECB and it is simply an economic policy measure aimed at reducing interest-rate spreads and at fiscal redistribution among EU member States, without the necessary legal legitimation. The case is sensitive for various reasons: although not yet used, the mere announcement of the OMT scheme played an important role in getting the euro area out of the acute phase of the crisis, and offers a credible defense against similar future scenarios. A declaration of illegality, or the placing of substantive limits on the programme, may jeopardise post-crisis recovery. Additionally, the reference is the first ever submitted by the German Constitutional Court, and its tone is quite bold; there is clear potential for conflict between the two courts, with consequences unknown for EMU. The German court's concerns regarding the legality of the OMT program can be summarized as follows: first, the program is a measure of economic, not monetary policy, and as such beyond the remit of the ECB. Second, a program of this kind amounts to monetary financing of a Member State, which Art 123 TFEU prohibits. It would allow the ECB to become lender of last resort to a country in financial difficulties, and it would transform EMU into a transfer union-something not foreseen in the current Treaties. An advisor for the EU Court of Justice issued an opinion on legality of the OMT (Outright Monetary Transaction) program the ECB introduce back in 2012 to reinforce the vow made to do whatever was necessary to ensure the region's financial and economic stability. Though non-binding, the ECJ tend to follow the assessment; and this opinion can undermine a significant safety net and shape the central bank's next big step on a path of heavy policy easing. Alternatively, an 'all clear' sign on QE would embolden ECB expectations for next week. The European Central Bank announced on January 22 2015 a massive purchase of sovereign debt for the next 18 month, boosting its monthly purchases of public and private securities, including euro-denominated securities issued by euro area governments and agencies, to 60 billion euros. (original abstract)

Słowa kluczowe

EN

Eurozone; Bonds; Bond market

PL

Strefa euro; Obligacje; Rynek obligacji

• Czasopismo: Studia Prawnicze i Administracyjne
• Rocznik: 2014
• Numer: nr 7 (1)
• Strony: 3--14

Twórcy

autor

Krzysztof Jerzy Gruszczyński

• Wyższa Szkoła Menedżerska w Warszawie

Bibliografia

• Oliver Gerstenberg, An End to European Multilateralism: A Comment on the German Bundesverfassungsgericht's OMT Decision, Int'l J. Const. L. Blog, http://www.iconnectblog. com/2014/02/an-end-to-european-multilateralism-a-comment-on-the-german-bundesverfassungsgerichts-omt-decision (access: 14.04.2015).
• Jacques Mazier, A Detailed Representation of the Eurosystem and the Current Crisis in the Eurozone , CEPN 2014. 02 www.univ-paris13.fr/CEPN/IMG/.../wp2014_02.pdf (14.04.2015).
• Russell A. Miller, The "Rumble in Karlsruhe": The German Federal Constitutional Court's Historic OMT Case (February 7, 2014), Int'l J. Const. L. Blog, http://www.iconnectblog.com/2014/02/the-rumble-in-karlsruhe-the-german-federal-constitutional-courts-historic-omt-case-february-7-2014 (14.04.2015).
• Russell Miller, Germany vs. Europe: The Principle of Democracy in German Constitutional Law and the Struggle for European Integration, Washington & Lee Public Legal Studies Research Paper Series 2013, 14: 7.