No further details at present hence muted response from euro but a tad lower initially as expectations are that the ruling helps clears the way for QE next week
Rtrs reporting comments from Advocate General Cruz Villalon
Update:
- OMT legitimate so long as there is no direct involvement in financial assistance programme that applies to state in question
- ECB must outline its reasons for adopting unconventional measures such as OMT
I can’t see that being a problem for Draghi to conjure up
EURUSD lower again at 1.1785 EURGBP 0.7755 EURJPY 137.65
The Advocate General considers that the OMT programme is suitable for bringing about a reduction in the interest rates on government bonds of the States concerned; such a reduction would make it possible to return to a certain degree of financial normality in those States, thus enabling the ECB to conduct its monetary policy in conditions of greater certainty and stability.
He also considers that the OMT programme is necessary as well as proportionate in the strict sense, since the ECB does not assume a risk that will necessarily make it vulnerable to insolvency.
- if OMT put into practice implementation must satisfy need for clear and precise descroption of extraordinary circumstances that rquire it
- OMT programme is necessary and proportionate as ECB does not take on risk making it vulnerable to insolvency
Looks like Draghi has his green light
EU Advocate General Pero Cruz Villalon
