The German institute center for economic studies president Hans-Werner Sinn has welcomed comments from Wolfgang Schaeuble yesterday that throw further doubt over whether the OMT will be allowed to be used.
The Bloomberg story about Schaeuble listed comments he made at an event in Germany where he said;
“(the ECB) cannot make these decisions because it has bound them to conditions that are beyond its control. ESM decisions are subject to a unanimous vote and we will not approve of such a programme as announced by the ECB”
Sinn notes that it is the first time the Federal government has publicly commented on the German constitutional courts ruling that the ECB is overstepping the mark with the OMT. On Schaeuble’s comments he says;
“This means that it seems unlikely that the OMT can ever be used to protect the buyers of over-indebted countries’ government bonds from financial losses.”
While in itself the story is mildly negative for the euro, it’s coming amongst a lot of campaigning ahead of the euro elections starting today, so that should be taken into consideration. There’s also the fact that it is very unlikely the OMT is going to be called upon anytime soon and so the clamour over its legalities has died right down.
