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The Bundesverfassungsgericht Preliminary Reference on the OMT Program: “In the ECB We Do Not Trust. What About You?”

Published online by Cambridge University Press:  06 March 2019

Thomas Beukers

Extract

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It should be no surprise that a case can be made both for and against the legality of secondary market bond purchases by the European Central Bank (ECB), and of the Outright Monetary Transactions (OMT) Program in particular. It is also no secret that the ECB—like many other institutional actors in Europe—is in several ways testing the boundaries of legal provisions as a consequence of the financial and sovereign debt crisis. Still, the Bundesverfassungsgericht (Federal Constitutional Court) Order of 14 January 2014 on the OMT Program is surprising for several reasons.

Type
Research Article
Information
German Law Journal , Volume 15 , Issue 2: Special issue - The OMT Decision of the German Federal Constitutional Court , 01 March 2014 , pp. 343 - 368
Copyright
Copyright © 2014 by German Law Journal GbR 

References

1 In fact, examples of both abound, including lawyers and economists. Arguing for the legality of bond purchases/OMT are e.g.: Grauwe, Paul De, The European Central Bank as Lender of Last Resort in the Government Bond Markets, 59 CESifo Econ. Studies 520, 529 (2013); Petch, Tolek, The Compatibility of Outright Monetary Transactions with EU law, 7 Law & Fin. Markets R. 13 (2013); Athanassiou, Phoebus, Of Past Measures and Future Plans for Europe's Exit from the Sovereign Debt Crisis, 36 Eur. L. Rev. 558 (2011); Bordes, Christian & Clerc, Laurent, The ECB's Separation Principle: Does It ‘Rule OK'? From Policy Rule to Stop-and-Go, 65 Oxford Econ. Papers i66 (2012); Smits, René, Correspondence, 49 CML Rev. 827 (2012); Wolff, Guntram, The ECB's OMT Programme and German Constitutional Concerns, in The G-20 and Central Banks in the New World of Unconventional Monetary Policy, 26 (Atiyas et al. eds., 2013). Arguing against the legality of bond purchases/OMT: Ruffert, Matthias, The European Debt Crisis and European Union law, 48 CML Rev. 1777 (2011); Economists Call ECB's Bond Buying Plan Unlawful, Wall St. J., 11 September 2013, available at http://blogs.wsj.com/economics/2013/09/11/economists-call-ecbs-bond-buying-plan-unlawful/; Münchau, Wolfgang, 136 Economists Sign Letter to Condemn OMT as Illegal, Eurointelligence, 12 September 2013, available at www.eurointelligence.com/professional/briefings/2013–09–12.html?cHash=69678b635f863ea2fef582bae804034c. Critical of bond purchases/OMT: Kaarlo Tuori & Klaus Tuori, The Eurozone Crisis. A Constitutional Analysis 165–168 (2014); Eijffinger, Sylvester & Hoogduin, Lex, The European Central Bank in (the) Crisis, 10 CESifo J. for Inst. Comparisons 32 (2012).Google Scholar

2 Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], Case No. 2 BvR 2728/13, (Jan. 14, 2014), https://www.bundesverfassungsgericht.de/en/decisions/rs20140114_2bvr272813en.html [hereinafter Decision]. Note that the text of the Order is also available in English.Google Scholar

3 This presentation of own views by national courts on the questions that they are referring has in the past been strongly advocated by Francis Jacobs. See for example, Jacobs, Francis, Further Reform of the Preliminary Ruling Procedure—Towards a “Green Light” System? in Europa und seine Verfassung. Festschrift für Manfred Zuleeg 204 (Gaitanides et al. eds., 2005). The ECJ itself invites national courts to present their own views. See Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings, 2012 O.J. (C 338) 1, point 24: “If it considers itself able to do so, the referring court or tribunal may, finally, briefly state its view on the answer to be given to the questions referred for a preliminary ruling. That information may be useful to the Court, particularly where it is called upon to give a preliminary ruling in an expedited or urgent procedure.”Google Scholar

4 Münchau concludes “[t]he ruling gives the distinct impression that the judges are referring the case not up to a higher court but down to a lower court.” See Münchau, Wolfgang, Germany's Constitutional Court Has Strengthened the Eurosceptics, Fin. Times, Feb. 9, 2014, available at http://www.ft.com/intl/cms/s/0/8a64e3ac8f25–11e3-be85–00144feab7de.html.Google Scholar

5 See for example Lebeck, Carl, National Constitutionalism, Openness to International Law and the Pragmatic Limits of European Integration—European Law in the German Constitutional Court from EEC to the PJCC—Part I/II, 7 German L. J. 907 (2006); Schneider, Karsten, Yes, But … One More Thing: Karlsruhe's Ruling on the European Stability Mechanism, 14 German L. J. 53 (2013).Google Scholar

6 See Beukers, Thomas, The New ECB and Its Relationship with the Eurozone Member States: Between Central Bank Independence and Central Bank Intervention, 50 CML Rev. 1579, 1613–15 (2013); Wendel, Mattias, Judicial Restraint and the Return to Openness: The Decision of the German Federal Constitutional Court on the ESM and the Fiscal Treaty of 12 September 2012, 14 German L. J. 21, 51 (2013).Google Scholar

7 See Dyson, Kenneth, Sworn to Grim Necessity? Imperfections of European Economic Governance, Normative Political Theory, and Supreme Emergency, 35 J. Eur. Integration 207 (2013).Google Scholar

8 See Thomas Pringle v. Government of Ireland, ECJ, Case C-370/12, (Nov. 27 2012), http://curia.europa.eu/juris/recherche.jsf?language=en.Google Scholar

9 See Decision, supra note 2, at para. 63. See also Pringle, supra note 8, at paras. 53–60.Google Scholar

10 Decision, supra note 2, at para. 69, italics added.Google Scholar

11 Pringle, , supra note 8, at para. 56.Google Scholar

12 Decision, supra note 2, at para. 64.Google Scholar

13 And later in the Decision that bond purchases “can, under certain conditions, help to support the monetary policy objectives of the European System of Central Banks …” Decision, supra note 2, at 96.Google Scholar

14 See Decision, supra note 2, at para. 73.Google Scholar

15 In general, legal acts of the Union legislature can at the same time have different objectives, such as the internal market and environment (see, e.g., Commission v. Council (Titanium Dioxide), ECJ, Case 300/89, (June 11 1991), http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61989J0300:EN:HTML). This can lead to debate about what legal basis is warranted when different legal bases have a different scope and prescribe different procedures. In this case however, there seems to be a single legal basis for the instrument of outright monetary transactions (Article 18(1) ESCB/ECB Statute), which is available for both the objectives of monetary policy and supporting economic policies. Therefore, it is not a matter of making a choice between different legal bases here, but of determining the scope of the ECB mandate on the basis of the objective of the instrument.Google Scholar

16 Decision, supra note 2, at para. 70.Google Scholar

17 See Decision, supra note 2, at para. 69.Google Scholar

18 Press Release, European Central Bank, Technical features of Outright Monetary Transactions (Sept. 6, 2012), available at http://www.ecb.europa.eu/press/pr/date/2012/html/pr120906_1.en.html.Google Scholar

19 E.g. Mario Draghi, President, European Central Bank, Press conference (Mar. 7, 2013); Mario Draghi, President, European Central Bank, Press conference (Aug. 1, 2013); Benoit Coeuré, Vice President, European Central Bank, Outright Monetary Transactions, One Year On, speech at the German Institute for Research and KfW Bankengruppe (Sept. 2, 2013).Google Scholar

20 Coeuré, supra note 19.Google Scholar

21 See Decision, supra note 2, at para. 55.Google Scholar

22 See Decision, supra note 2, at para. 73.Google Scholar

23 See Decision, supra note 2, at 72. It does so in reference to a pre-OMT press release of 26 July 2012, by which it means the famous London speech of Draghi in which he pledged that “[w]ithin our mandate, the ECB is ready to do whatever it takes to preserve the euro,” saying immediately after that the main short-term challenge is the financial fragmentation. This preservation objective has been repeated also post-OMT announcement, see e.g. Coeuré, supra note 19; Asmussen in the June 2013 hearing before the Bundesverfassungsgericht, Jörg Asmussen, Introductory Statement by the ECB in the Proceedings before the Federal Constitutional Court (Jun. 13 2013).Google Scholar

24 See Decision, supra note 2, at para. 73.Google Scholar

25 Pringle, , supra note 8, at para. 135.Google Scholar

26 Decision, supra note 2, at para. 71.Google Scholar

27 See Decision, supra note 2, at para. 71.Google Scholar

28 Mody supports the Bundesverfassungsgericht's position. “The court was right to question the factual basis of the ECB's claim that the risk premiums reflected an unfounded market fear—a claim that was based on cherry-picked evidence.” See Mody, Ashoka, The ECB's Bridge Too Far, Project Syndicate (Feb. 11, 2014), available at http://www.project-syndicate.org/commentary/ashoka-mody-shows-why-the-ecb-s–outright-monetary-transactions–program-is-fundamentally-flawed.Google Scholar

29 See German Council of Economic Experts, Annual Economic Report 2013/14 n. 200. The German Council of Economic Experts itself bases its conclusions on Klose, Jens & Weigert, Benjamin, Sovereign Yield Spreads During the Euro-Crisis—Fundamental Factors Versus Systemic Risk, Arbeitspapier 07/2012, Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung [Experts on the Assessment of Economic Development] (2012), available at http://www.sachverstaendigenratwirtschaft.de/fileadmin/dateiablage/download/publikationen/arbeitspapier_07_2012.pdf.Google Scholar

30 Fratscher, Marcel, Hüther, Michael & Wolff, Guntram, Taking the Mandate of the ECB Seriously, BerlinOeconomicus, (Feb. 6, 2014), available at https://berlinoeconomicus.diw.de/en/2014/02/06/taking-the-mandate-of-the-ecb-seriously.Google Scholar

31 See Decision, supra note 2, at para. 73.Google Scholar

32 At least 136 German professors of economics share this point: “If monetary policy were its focus, the ECB would buy the representative bond portfolio, including sovereign or private debt from all member states. But this is not the policy. Instead the ECB concentrates on buying the bonds of over-indebted member states.” See Wall Street Journal, supra note 1.Google Scholar

33 See Decision at 77. Compare Münchau, Wolgang, Anleihekäufe: Wie die EZB das Verfassungsgericht clever umgehen kann [Bond Purchases: How the ECB can Handle the Constitutional Court Clever], Spiegelonline, (Feb. 12, 2014), available at http://www.spiegel.de/wirtschaft/soziales/ezb-anleihenkaeufe-wolfgang-muenchau-zum-urteil-des-bvg-a-952997.html: (“From a legal perspective the German Federal Constitutional Court has entirely correctly argued that we are clearly not dealing with monetary policy here. Because monetary policy does not pose conditions.”) (own translation from German); Mody, supra note 28 (“If the ECB were truly convinced that risk premiums were unreasonably high, and that distressed countries’ debt was sustainable, conditionality would have been unnecessary.”). For a different critique, see De Grauwe, supra note 1, at 528 (“in times of crisis, the central bank must be willing to provide unlimited support without making this support conditional on good behavior. Other institutions must as I have argued, enforce the latter.”).Google Scholar

34 See Decision, supra note 2, at para. 74.Google Scholar

35 See id. at para. 76.Google Scholar

36 See id. at para. 78.Google Scholar

37 Id. at para. 65.Google Scholar

38 See Monetary and Fiscal Policy Interactions in a Monetary Union, ECB Monthly Bulletin, 52 (July 2012).Google Scholar

39 Dutch ECB Governing Council member Knot explains the dynamics as follows: “We deliberately waited with buying Italian bonds. As long as it took for Prime Minister Berlusconi to realize that he had to take measures. We did not tell Berlusconi what to do, but it was clear under what conditions we would step in. It provides us also with an instrument of pressure to keep Italy on track. If we stop buying their bonds for only half a day, the interest will go up and the pressure will rise on the government to take measures.” (own translation from Dutch), Banning, Cees & Kalse, Egbert, Overheidsfinanciën draaien nu alleen om geloofwaardigheid [Public Finances are All About Credibility Now], NRC Handelsblad (Sept. 23, 2011).Google Scholar

40 Coeuré, supra note 19.Google Scholar

41 See Borger, Vestert, The ESM and the European Court's Predicament in Pringle, 14 German L.J. 113, 119 (2013).Google Scholar

42 Decision, supra note 2, at para. 79.Google Scholar

43 See Press Release, supra note 18.Google Scholar

44 Decision, supra note 2, at para. 79.Google Scholar

45 Another concern that has been raised in the literature is about the credibility of conditionality: once started purchases can no longer be stopped if conditions are not met, as this would be harmful to the monetary policy transmission mechanism. See Wolff, supra note 1, at 26.Google Scholar

46 Cf. Press Conference, Trichet, Jean-Claude, President, European Central Bank (Oct. 6 2011) (“we had to consider that there is a serious problem of the transmission of our monetary policy decision because financial stability is not ensured at the level of the euro area as a whole and because we have a number of countries which have their own “risk-free” benchmark rates at levels that are quite different from country to country.”).Google Scholar

47 See Decision, supra note 2, at para. 96.Google Scholar

48 The monetary policy transmission mechanism should ensure that banks transmit ECB conventional monetary policy to companies and consumers in the real economy. According to the ECB a number of factors, including financial instability, hinder a proper functioning of this mechanism during the crisis. See also Beukers, supra note 6, at 1605.Google Scholar

49 “The ECB's argument that the two programmes are part of its monetary policy and designed to correct malfunctions in the transmission mechanism deserves a fair assessment, which must be informed by economic theory and monetary-policy practices.” Tuori and Tuori, SUPRA note 1, at 166.Google Scholar

50 See Decision, supra note 2, at para. 68.Google Scholar

51 See id. Google Scholar

52 E.g. Sester, Peter, The ECB's Controversial Securities Market Programme and its Role in Relation to the Modified EFSF and Future ESM, 9 Eur. Company and Financial L. R. 156, 167–168 (2012); De Grauwe, supra note 1, at 522–25.Google Scholar

53 According to the case law of the Bundesverfassungsgericht compliance with the independence of the European Central Bank and the primary objective of price stability are permanent constitutional requirements of a German participation in the monetary union. See for example Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], 2 BvR 1390/12 of Sept. 12, 2012, para. 219 (English version).Google Scholar

54 See Decision, supra note 2, at para. 68.Google Scholar

55 See Decision, supra note 2, at para. 39.Google Scholar

56 See Decision, supra note 2, at para. 74.Google Scholar

57 See Decision, supra note 2, at paras. 65, 76.Google Scholar

58 See Peers, Steve, Clash of the Judicial Titans: Will the Euro Survive?, EU L. Analysis, (Feb. 9, 2014), available at http://eulawanalysis.blogspot.it/2014/02/clash-of-judicial-titans-will-euro.html.Google Scholar

59 Compare the limited power of the Council to provide financial assistance on the basis of Article 122 TFEU.Google Scholar

60 See Beukers, supra note 6, at 1579.Google Scholar

61 See id. at 1607.Google Scholar

62 See Decision, supra note 2, at para. 83.Google Scholar

63 Press Release, supra note 18.Google Scholar

64 See also Asmussen, supra note 23.Google Scholar

65 See Decision, supra note 2, at para. 82.Google Scholar

66 See Decision, supra note 2, at para. 100.Google Scholar

67 A secondary market or indirect purchase means that ECB purchases bonds that are already on the market, and not directly from the Member States.Google Scholar

68 See Decision, supra note 2, at paras. 85–86.Google Scholar

69 See ECB Opinion of 25 March 2010 on Independence, Confidentiality and the Prohibition of Monetary Financing (CON/2010/25) at 4, available at http://www.ecb.europa.eu/ecb/legal/pdf/en_con_2010_25_f_sign.pdf.Google Scholar

70 See Council Regulation 3603/93, 1993 O.J. (L 332) 1 (EC). De Grauwe is less concerned: “According to its statute, the ECB is allowed to buy government bonds in the secondary markets in the context of its open market operations. In doing so, the ECB does not provide credit to governments. What it does is to provide liquidity to the holders of these government bonds. These holders are typically financial institutions. In no way can this be interpreted as a monetary financing of government budget deficits.” De Grauwe, supra note 1, at 529.Google Scholar

71 See Pringle, supra note 8, at paras. 135–36.Google Scholar

72 See Decision, supra note 2, at para. 86. See also Pringle, supra note 8, at para. 133.Google Scholar

73 See Bruno De Witte & Thomas Beukers, The Court of Justice approves the creation of the European Stability Mechanism outside the EU legal order: Pringle, 49 CML Rev. 805, 841 (2013).Google Scholar

74 See Decision, supra note 2, at para. 87.Google Scholar

75 Peers disagrees with the Court: “In the ordinary course of events, purchasing significant numbers of eurozone government bonds directly on the secondary market might not have a strong link to the existence of the single currency. But in the current circumstances, it does. So this justifies a flexible approach to the limits which might otherwise apply to the ECB's actions.” Peers, supra note 58.Google Scholar

76 See Decision, supra note 2, at 88. Wolff considers this to be a prior a sensible point. See Wolff, Guntram, OMT Ruling: Karlruhe Says No, Refers to ECJ and Suggests ECB Should Always be Preferred Creditor, Bruegel, (Feb. 7, 2014), available at http://www.bruegel.org/nc/blog/detail/article/1240-omt-ruling-karlsruhe-says-no-refers-to-ecj-and-suggests-ecb-should-always-be-preferred-creditor.Google Scholar

77 Decision, supra note 2, at para. 89.Google Scholar

78 See Decision, supra note 2, at para. 91.Google Scholar

79 See Decision, supra note 2, at para. 92.Google Scholar

80 Compare also the Annual Economic Report 2013/14 of the German Council of Economic Experts, n. 202: “A legally binding rule on the standstill period would allow for a clearer picture in the assessment whether the ECB is engaging in monetary financing.” (own translation from German).Google Scholar

81 Compare the different emphasis: “A fourth way in which the programmes differ from one another is that, under the OMT programme, we are not only able to buy government bonds, but also to sell them again, and their valuation is based on market prices rather than on final maturity.” Asmussen, supra note 23. And: “We therefore also interpret the prohibition of monetary financing as being comprehensive insofar as ways to circumvent it are addressed. It is not possible to purchase newly issued government bonds at certain times.”Google Scholar

82 See Decision, supra note 2, at para. 94.Google Scholar

83 Decision, supra note 2, at para. 87.Google Scholar

84 Decision, supra note 2, at para. 87.Google Scholar

85 Decision, supra note 2, at para. 97. Münchau's interpretation of this paragraph: “The court said bluntly that it was in the nature of a debt crisis for transmission mechanisms to break; they were no matter for the central bank or monetary policy.” Münchau, SUPRA note 4.Google Scholar

86 Decision, supra note 2, at para. 100.Google Scholar

87 See e.g. The German Court and the European Central Bank. Who is Exceeding Their Powers?, The Economist Free Exchange, (Feb. 7, 2014), available at http://www.economist.com/blogs/freeexchange/2014/02/german-court-and-european-central-bank; Peers, supra note 58; Wolff, supra note 76.Google Scholar

88 See Peers, supra note 58.Google Scholar

89 Decision, supra note 2, at para. 83.Google Scholar

90 Bennink, Harald & Huizinga, Harry, How to Limit the ECB's OMT?, VoxEU, (Jul. 12, 2013), available at http://www.voxeu.org/article/how-limit-ecb-s-omt.Google Scholar

91 “That the OMT would be ex ante unlimited, meanwhile, was the whole point of its magic: [I]t is a very difficult commitment for the market to test, ex ante, by the same token. This is why the OMT has worked without ever, actually, being activated.” The OMT—Um, What Does This Thing do Again? A Bundesverfassungsgericht Guide, FT Alphaville, (Feb. 7, 2014), available at http://ftalphaville.ft.com/2014/02/07/1766042/the-omt-um-what-does-this-thing-do-again-a-bundesverfassungsgericht-guide.Google Scholar

92 See The Economist, supra note 87.Google Scholar

93 Wolff, supra note 76: “That the OMT would be pari passu with ordinary bondholders—in other words, that the ECB would observe the ordinary terms of the assets it was buying and not cheat by seeking special treatment—was very important for markets. One reason the SMP could never have supported Spain and Italy was that size meant more subordination for private creditors precisely when the risk of sovereign default was high: the SMP was senior.” FT Alphaville, supra note 91.Google Scholar

94 Compare also the Annual Economic Report 2013/14 of the German Council of Economic Experts, n. 202: “A stricter limit and thereby the establishment of the maximum risk of losses for Germany could be one of the key factors for the German Federal Constitutional Court. Even a clearly limited OMT Program could still create a strong effect on government bond spreads, as long as the ECB continues to renounce seniority status. The SMP predecessor lost its effect only with the debt cut on Greek bonds.” (own translation from German). Google Scholar

95 See The Economist, supra note 87.Google Scholar

96 See Decision, supra note 2, at para. 79.Google Scholar

97 See Decision, supra note 2, at para. 83.Google Scholar

98 See Decision, supra note 2, at para. 73.Google Scholar

99 See Decision, supra note 2, at para. 87.Google Scholar

100 See Decision, supra note 2, at paras. 65, 74–78.Google Scholar

101 Decision, supra note 2, at para. 71.Google Scholar

102 Cf. Borger, , supra note 41, at 135.Google Scholar

103 See Decision, supra note 2, at para. 72.Google Scholar

104 See Press Conference, Jean-Claude Trichet, President, European Central Bank (Jun. 10, 2010); Press Conference, Jean-Claude Trichet, President, European Central Bank (Oct. 6, 2011); Press Conference, Mario Draghi, President, European Central Bank (Mar. 7, 2013); Press Conference, Jean-Claude Trichet, Vice President, European Central Bank (Oct. 6, 2011).Google Scholar

105 See Monetary and Fiscal Policy Interactions in a Monetary Union, ECB Monthly Bulletin 52 (July 2012). For a recent discussion of this relationship, see Smets, Frank, Financial Stability and Monetary Policy: How Closely Interlinked?, Sverigse Riksbank Econ. Rev. 121, 151–52 (2013).Google Scholar

106 “Financial stability should also be on the radar of a central bank. … With their unlimited firing power, central banks are the only institutions capable of stabilizing the financial system. The ECB finally recognized this old truth when it decided to commit itself to unlimited purchases of government bonds in times of crisis.” De Grauwe, supra note 1, at 529–30; “There is by now a consensus that monetary policy should take financial stability into account in the preventive phase but debate remains as to what extent this should be the case.” Geeroms, Hans, Stefaan Ide & Frank Naert, The European Union and the Euro. How to Deal with a Currency Built on Dreams 238 (2014). See also Fratscher, Hüther & Wolff, , supra note 30); see Schwarzer, Daniela, The Euro Area Crisis, Shifting Power Relations and Institutional Change in the European Union, 3 Global Pol'y 28, 34 (2012).Google Scholar

107 See Decision, supra note 2, at para. 86.Google Scholar

108 Compare Article 127(1) and (5) TFEU. Tuori and Tuori refer to stability of the euro area as a whole as the “most comprehensive stability concept.” See Tuori and Tuori, supra note 1, at 57. They also state that “what ‘financial stability of the euro area as a whole’ exactly means is far from evident”.Google Scholar

109 Tuori and Tuori, supra note 1, at 58.Google Scholar

110 The effectiveness of OMT on the monetary policy transmission mechanism has been questioned. See Wolfgang Münchau, The ECB's Priority Should be to Fix Southern Europe, Fin. Times, (Apr. 8, 2013), available at http://www.ft.com/intl/cms/s/0/df18590a-9d4b-11e2-a8db-00144feabdc0.html; Zoli, Edda, Italian Sovereign Spreads: Their Determinants and Pass-Through to Bank Funding Costs and Lending Conditions, 84 IMF Working Paper (2013).Google Scholar

111 Eijffinger and Hoogduin are critical of governments in this sense. “[G]overnments did not take sufficient measures to end the market turbulence or to make it possible for the ECB to (gradually) exit the programme.” Eijffinger & Hoogduin, supra note 1, at 34. “Now, there have been governments which have used their time well and others less well, but it is completely their own responsibility. It is not that OMT has in any sense changed things. OMT addresses other objectives.” Press Conference, Mario Draghi, President, European Central Bank (July 4, 2013).Google Scholar

112 Also, it seems that in light of the conditions proposed for a compatible OMT the earlier SMP bond purchasing Program of the ECB is safe. Under the SMP, there was a preferred creditor status for the ECB and purchase volumes were not unlimited.Google Scholar

113 See The Economist, supra note 87.Google Scholar

114 See Taylor, Paul, ECB's Ever More Virtual Deterrent Still Effective, Reuters, (Feb. 12, 2014), available at http://uk.mobile.reuters.com/article/idUKBREA1B1GF20140212?irpc=932.Google Scholar

115 For proposals in this direction, See Bennink and Huizinga, supra note 90.Google Scholar

116 Compare with Drudi, Francesco, Durré, Alain & Mongelli, Francesco Paolo, The Interplay of Economic Reforms and Monetary Policy: The Case of the Eurozone, 50 J. Common Market Stud. 881, 894 (2012).Google Scholar

117 “Of course, what we expect is that the EFSF, which will have the capacity to intervene in the secondary markets, will be effective and efficient in its interventions. That would permit us not to have to intervene to help restore more appropriate monetary policy transmission.” Press Conference, Jean-Claude Trichet, Vice President, European Central Bank (Aug. 4, 2011).Google Scholar

118 See Statement by the Heads of State or Government of the Euro Area and EU Institutions, 21 July 2011, pt. 8, available at https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/123978.pdf.Google Scholar

119 For a discussion of the indirect ways in which the ECB could function as a lender of last resort for sovereigns, including by making the ESM an eligible counterparty of the Eurosystem, and including political and legal hurdles, see Buiter, Willem & Rahbari, Ebrahim, The ECB as Lender of Last Resort for Sovereigns in the Euro Area, CEPR Discussion Paper Series No. 8974 (2012).Google Scholar

120 Opinion of the European Central Bank on a Draft European Council Decision Amending Article 136 of the Treaty on the Functioning of the European Union with Regard to a Stability Mechanism for Member States Whose Currency is the Euro, 2011 O.J. (C 140) 8, at Recital 9. See also Pringle, supra note 8, at para. 127.Google Scholar

121 Compare with Article 263 TFEU.Google Scholar

122 Compare with Münchau, supra note 4.Google Scholar

123 The President of the Court could exceptionally decide of his own motion that because of the nature of the case an expedited procedure should be used. See Article 105 of the Rules of Procedure of the Court of Justice, 2012 O.J. (L 265) 1. Such a procedure was used in the Pringle case See Pringle, supra note 8.Google Scholar

124 Press Release, European Central Bank, Technical Features of Outright Monetary Transactions (Sept. 6, 2012), available at http://www.ecb.europa.eu/press/pr/date/2012/html/pr120906_1.en.html.Google Scholar

125 Compare with Mario Draghi, ECB Press Conference, 4 April 2013: “(…) it is being worked on and will come out when it is time (…)”.Google Scholar

126 See Decision (Justice Lübbe-Wolff dissenting).Google Scholar

127 Thym, Daniel, A Spring in the Desert; the German ECJ Reference on the ECB Bond Purchases, Verfassungsblog (Feb. 8, 2014), available at http://www.verfassungsblog.de/en/eine-quelle-in-der-wueste/#.Uwp2oEpwaUk.Google Scholar

128 See Pringle, supra note 8.Google Scholar

129 Dissenting Opinion of Justice Gerhardt: “This case shows in abundant clarity how difficult it is to handle the criterion ‘manifest. … Monetary and economic policies relate to each other and cannot be strictly separated. The delimitation of the objectives and duties of the European System of Central Banks in Art. 127 TFEU corresponds to this. A review with regard to whether the principle of conferral has been adhered to must take into account that, in consideration of the nature of independent central banks, the delimitation of their assigned powers has only been made with a view to their functions; this assignment of powers must, to a certain extent, include the authorisation to define one's own limits of actions. … It seems to me that the claim, that the objective of the OMT Decision is first and foremost the re-establishment of the monetary transmission mechanism, cannot be contradicted, at least not with the necessary unequivocalness.”Google Scholar

130 Tuori and Tuori note that “what ‘financial stability of the euro area as a whole’ exactly means is far from evident. None of the legal or political instruments employing it, including Pringle, have made any attempt at a definition. The wide variety of European measures taken to re-establish financial stability also testifies to the vagueness of the concept.” Tuori and Tuori, supra note 1, at 133.Google Scholar

131 See Witte, De & Beukers, , supra note 73, at 843.Google Scholar

132 Compare with the ECJ's interpretation of Article 125 TFEU in Pringle. Tuori and Tuori, supra note 1, at 131.Google Scholar

133 See Taylor, supra note 114.Google Scholar

134 See Fleming, Sam, ECB Governing Council Member Attacks German Court Ruling on OMT, Fin. Times, (Feb. 17, 2014), available at http://www.ft.com/intl/cms/s/0/286744cc-97e7–11e3-ab60–00144feab7de.html.Google Scholar