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11 Jun 2013
Asmussen and Weidmann make their cases before the German Constitutional Court
FXstreet.com (Córdoba) - The German member of the Executive Board of the ECB, Jörg Asmussen, defended the OMT program before the German Constitutional Court, which holds crucial hearing into ECB's bond-buying program.
Asmussen said that the announcement of OMTs "was and is the necessary and appropriate step to eliminate the disruption in the transmission of monetary policy caused by concerns that there would be an unwanted break-up of the euro".
The Board member added that the ECB and its decision-makers are aware of the limits of its monetary policy mandate. "Our measures are aimed at maintaining monetary policy transmission and preventing an unwanted break-up of the euro", he said. "It is not allowed to, is not able to and does not want to replace the actions of democratically elected governments", he adds. "Quite the opposite. The OMT programme is therefore aimed at protecting the market mechanism so as to urge the Member States to make the necessary reforms".
Asmussen also said that introducing the OMT program was the right thing to do to ensure price stability in the euro area. "After all, a currency can only be stable if its continued existence is not in doubt".
On the other hand, Bundesbank's Weidmann made the anti-OMT case. He said price stability is ECB's core mandate and that some decisions of the ECB council are "problematic". Weidmann also argued that bond markets have to have a disciplinary function and that long-term effects of crisis policies must be watched.
Asmussen said that the announcement of OMTs "was and is the necessary and appropriate step to eliminate the disruption in the transmission of monetary policy caused by concerns that there would be an unwanted break-up of the euro".
The Board member added that the ECB and its decision-makers are aware of the limits of its monetary policy mandate. "Our measures are aimed at maintaining monetary policy transmission and preventing an unwanted break-up of the euro", he said. "It is not allowed to, is not able to and does not want to replace the actions of democratically elected governments", he adds. "Quite the opposite. The OMT programme is therefore aimed at protecting the market mechanism so as to urge the Member States to make the necessary reforms".
Asmussen also said that introducing the OMT program was the right thing to do to ensure price stability in the euro area. "After all, a currency can only be stable if its continued existence is not in doubt".
On the other hand, Bundesbank's Weidmann made the anti-OMT case. He said price stability is ECB's core mandate and that some decisions of the ECB council are "problematic". Weidmann also argued that bond markets have to have a disciplinary function and that long-term effects of crisis policies must be watched.