ZEW-President Fuest on the German Constitutional Court Decision Regarding the OMT Programme

Today the German Constitutional Court decided to submit the ECB’s OMT programme for examination to the European Court of Justice. ZEW-President Prof. Dr. Clemens Fuest reacts to the court’s decision as follows.

"Today’s OMT decision of the German Constitutional Court has far reaching consequences. The German Constitutional Court thinks that the ECB has overstepped its mandate. It does see the possibility that this can be mended if and only the OMT programme is restricted.

The Court argues that this restriction would have to include the rule that bonds bought by the ECB must enjoy seniority status. The German Court indirectly asks the European Court of Justice (ECJ) to impose this restriction. If that happened the OMT programme would become ineffective because its objective of stabilizing bond markets can only be achieved if the ECB has no seniority status in case of a debt restructuring. Apart from the legal consequences of this ruling, today’s decision is a political signal that the responsibility for Eurozone rescue policies cannot be left to the ECB and its monetary policy."