MPI Gemeinschaftsgüter Martin Hellwig. Governments, Banks, and Monetary Policy in the Crisis. Berlin, DIW, September 2013. My Own Position on OMT. Grudgingly in favour of OMT
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The German Constitutional Court, which is not in charge. has tried to make a distinction according to the objectives of the intervention: Illegal if intended to cirumvent the prohibition of direct funding – legal if intended to pursue monetary policy objectives
Proceedings in Karlsruhe have focused on the objectives of the ECB in OMT
Giving the Court (in KA or LUX) the right to assess objectives – beyond considerations of arbitrariness – endangers the independence of the ECB
.... Especially in view of the fact that the German Constitutional Court may decide that independence of the central bank with only the specification of price stability as an objective may violate Art. 20 GG
The Maastricht Judgment: Ceding sovereignty over monetary policy violates Art. 20 GG, the need for democratic legitimacy, except that with independence and a clear objective there is not much room for abuse.
Now we have seen that the objective of price stability leaves room for lots of decisions with vast distributive effects...
This is a problem within national boundaries as well as beyond: Was the Bundesbank law unconstitutional?