Germany holds off on condemning outright monetary transaction policy

The policy credited with halting the euro crisis — outright monetary transactions — is likely to exceed the European Central Bank’s remit and violate German law according to the German constitutional court.

The antipathy of many German banking and judicial figures towards the programme of unlimited buying of government bonds on the secondary market by the ECB is cited as one of the reasons that led the Government not to apply for a precautionary credit line when exiting the bailout.

While the announcement of outright monetary transactions succeeded in calming markets when nothing else did, it has never been used, and it is understood the necessary legal text has never been drawn up.