OMT’s German Trial

Anti-euro groups hope that the German Constitutional Court will rule that the ECB's "outright monetary transactions" program not violates the EU treaties or Germany’s constitution. But the court lacks the legal grounds – and probably the will – to block OMT before it is activated.

TILBURG – On June 12, the eyes of politicians, economists, analysts, and investors will alight briefly on the leafy German town of Karlsruhe, as the German Constitutional Court holds hearings on the legitimacy of the European Central Bank’s “outright monetary transactions.” The OMT scheme permits the ECB to purchase weaker eurozone countries’ government bonds, on the condition that these countries’ authorities implement European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programs. The court’s ruling is expected by the end of the summer.

Anti-euro groups, which have been proliferating across Europe, hope that the court will decide that the OMT program violates either the European Union treaties, the ECB’s statute, or Germany’s constitution. But, while OMT may well turn out to be a mistake, the court does not actually have the constitutional authority to forbid the ECB from pursuing it.

Given that judicial decisions are ex post, not ex ante, the court cannot prevent OMT before it is activated. The ECB has stated that it would initiate OMT when needed, and under strict conditions. While the ECB – like most other EU institutions – has a poor track record on adhering to rules, even its own, the assumption that OMT will be no different is insufficient to justify a ruling against it.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.


Log in;
  1. Patrick Kovarik/Getty Images

    The Summit of Climate Hopes

    Presidents, prime ministers, and policymakers gather in Paris today for the One Planet Summit. But with no senior US representative attending, is the 2015 Paris climate agreement still viable?

  2. Trump greets his supporters The Washington Post/Getty Images

    Populist Plutocracy and the Future of America

    • In the first year of his presidency, Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power, while pursuing policies to enrich his fellow plutocrats. 

    • Sooner or later, Trump's core supporters will wake up to this fact, so it is worth asking how far he might go to keep them on his side.
  3. Agents are bidding on at the auction of Leonardo da Vinci's 'Salvator Mundi' Eduardo Munoz Alvarez/Getty Images

    The Man Who Didn’t Save the World

    A Saudi prince has been revealed to be the buyer of Leonardo da Vinci's "Salvator Mundi," for which he spent $450.3 million. Had he given the money to the poor, as the subject of the painting instructed another rich man, he could have restored eyesight to nine million people, or enabled 13 million families to grow 50% more food.

  4.  An inside view of the 'AknRobotics' Anadolu Agency/Getty Images

    Two Myths About Automation

    While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

  5. A student shows a combo pictures of three dictators, Austrian born Hitler, Castro and Stalin with Viktor Orban Attila Kisbenedek/Getty Images

    The Hungarian Government’s Failed Campaign of Lies

    The Hungarian government has released the results of its "national consultation" on what it calls the "Soros Plan" to flood the country with Muslim migrants and refugees. But no such plan exists, only a taxpayer-funded propaganda campaign to help a corrupt administration deflect attention from its failure to fulfill Hungarians’ aspirations.

  6. Project Syndicate

    DEBATE: Should the Eurozone Impose Fiscal Union?

    French President Emmanuel Macron wants European leaders to appoint a eurozone finance minister as a way to ensure the single currency's long-term viability. But would it work, and, more fundamentally, is it necessary?

  7. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

    Order now