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GERMANY’S TOP COURT has ruled that the European Central (ECB) can use a crisis-solving tool which Eurosceptics said allowed it print money to give to states.
The country’s highest court ruled today that the ECB’s 2012 bond-buying plan called Outright Monetary Transactions (OMT) is legal under the German constitution.
The court threw out objections to the mechanism, which was announced in 2012, but has never actually been used.
It formed part of ECB President Mario Draghi’s landmark promise to do “whatever it takes” to save the battered euro at the height of the crisis in 2012.
That vow, backed by the announcement of the OMT programme, helped reduce borrowing costs for the most debt-hit countries, calmed markets and is widely credited with bringing the eurozone back from the brink.
This is ‘good for Ireland’
Brady Gordon, an Irish Research Council PhD scholar at the School of Law in Trinity College says an adverse ruling could have ended the single currency.
However, he says the ruling is “good for Ireland and good for the euro”.
“The ruling means the status quo goes on. It allows the ECB to bail out countries which get into difficulty.”
The promise of OMT was that the ECB could, if necessary, buy up unlimited amounts of government bonds from debt-stricken countries that had pledged reforms such as Italy, Spain and Portugal.
The plan has its critics
Critics charged that the ECB is essentially printing money and lavishing it on states, leaving taxpayers with the risk of one day having to foot the bill.
Nevertheless, few observers had expected the Constitutional Court to torpedo the ECB’s programme.
In January 2014, it had voiced concerns about OMT but then kicked the case up to the European Court of Justice in Luxembourg.
The EU’s highest court has since essentially backed OMT, arguing that while the ECB’s chief purpose is price stability, it may also support EU economic policy goals.
That move is part of the ECB’s massive quantitative easing, or QE, stimulus programme that aims to boost inflation and growth in the 19-member currency bloc.
With AFP reporting.
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These people must not have seen AIB’s latest advertising campaign – theme “brave”, as it getting up early, sticking to the task and running your business. It appears AIB have become a river of lending to hard pressed sme’s and the farming community. A most disgraceful and dishonest ad campaign in my opinion.
All of the adds for banks are dishonest. They are all giving mortgages and loans to SMEs but in reality this is a charade. You only have to talk to solicitors who will tell you that clients are being turned down for mortgages for the flimsiest of excuses. The current advertising campaigns are to give the impression that everything is back to normal.
Makes you feel good that we bailed the banks out,doesn’t it!
” Brave ” how are you! You would need to be brave…and foolhardy….If you thought approaching the back might make a difference to your struggling. The economy continues to limp along for all those brave hearts at the bottom of the pile while those with large cash deposits get bigger and richer. Only a fool would believe the spin the government espouse. There is no recovery, there is no trickle down, there are still empty shop units all over the country. And it’s too late for lending, what’s needed are grants, vat and tax breaks, lower rates and a commitment to changing the upwards only rent reviews.
I am so glad someone else made reference to that ad! It’s awful condescending Shi*e. the absolute cheek of AIB to put out an ad like that. The voice over is an appalling choice. Completely out of touch with reality.
This is the sort of evidence out there that shows where our economy is truly at and not the crap that is spun by FG & Labour. You can’t tax the crap out of people to pay debt, run a high spend economy and expect growth.
If Morgan Kelly’s recent prediction is correct, the outstanding loans to small business, if called in by the banks, is the biggest threat to the economy.
The gov have been choosing public sector and bondholders over private sector. Every tax hike means a loss of business to a restaurant and most small service businesses out there. Then you have Nama forcing zombie businesses to compete with ligit ones. And if you have survived all that the local council will be gouging the business in return for very little. The Irish Economy seems to be using Atlas Shrugged as a strategic plan.
This is the sort of evidence out there that shows where our economy is truly at and not the crap that is spun by FG & Labour. You can’t tax the crap out of people to pay debt, run a high spend economy and expect growth.
What happened to businesses maintaining proper current ratios and acid test ratios to ensure their short term expenses are covered? The SME sector insisted on maxing out every line of credit they could possibly set their eyes on..and more.
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