The European Court of Justice (ECJ) yesterday decided that the OMT programme, i.e. the unlimited purchase of bonds, was in line with EU legislation. The purchases were not in breach of the ban of monetary financing of the budget. Of course the final decision on the question of OMT has not yet been taken, as the German Constitutional Court has yet to reach a decision.
However, it will take some time yet before the Constitutional Court reaches a final verdict. That makes it clear: during the current negotiations with Greece the OMT programme will serve as a safety net.
"Even the threat of purchases as part of the OMT programme is likely to prevent any form of contagion of other peripheral countries in case of a Grexit. It worked well during the euro debt crisis of 2012, it will work again and is likely to further limit the downside potential of the EUR in case of a Grexit", says Commerzbank.
