• The new tool should be different as circumstances are not the same
  • It will be different from PEPP, APP or OMT programmes

The OMT was designed to cater more towards a crisis of solvency a decade ago and that isn't exactly the main challenge that the ECB is facing right now. It is arguably the tool that has the closest set of characteristics desired by the central bank to counter fragmentation but it offers up a lot of political challenges as well. Don't expect Italy to sign up for any of that.

Ideally, the new tool should come with the right kind of economic components offered up from the OMT but without the political stipulations. It is going to be hard to do that while having to navigate backlash from its own members, especially Germany. So, we'll have to see how creative policymakers can be in the weeks/months ahead.