"It is not our goal to prevent a euro member state from going insolvent." This was stated by Joerg Asmussen, member of the Executive Committee of the ECB, who represents the position of the Central Bank during the second day of debate in the German High Court on the OMT plan. The ECB, Asmussen assured, intends to limit purchases of government bonds on the secondary market in favor of euro countries under stress "to the minimum necessary" and "will not pay an excessive price for bonds".
The conditionality required by the ESM and the IMF "guarantees the sustainability of the public debt" of the country that requests it. On the other hand, in times of crisis and consequent fragmentation of the financial markets “the single measures that should be good for everyone don't work. If the market price is 20 and someone offers you 60 – Asmussen explained to the president of the High Court, Andreas Vosskuhle, who asked about fears of losses from the ECB – it would not be logical to buy it at 60. I think we have to ensure that the purchase and sale of bonds on the secondary market remains a monetary instrument. This type of intervention represents “a normal instrument of monetary policy”.
Intervention on the market would take place as already envisaged by the previous Smp program (which, however, did not have conditionality) "asking offers from various market participants" and without setting a price target. The ECB will not reveal if and when it will buy bonds with the intention of remaining “completely unpredictable. The important thing – added Asmussen – is that the economic risk remains in the market. Investors will have no certainty as to whether someone will buy their stock, or when or at what price." Vosskuhl, for his part, underlined how the conditionality requested by the ECB to start the purchases is currently "at a very abstract level" and that "there are some types of commitments that cannot always be kept".
Asmussen forcefully asked that "the possibility for the ECB to act on the secondary market of government bonds be guaranteed" because "otherwise we would be forced to turn to other market segments: I, personally - said Asmussen - believe that the purchase of corporate bonds is a worse evil.” Answering questions from the President of the High Court, Asmussen also explained that it is not true that the ECB is continually loosening the criteria for the presentation of collateral at refinancing auctions, thus assuming excessive risks: "Since 2008 - he said - there have been been 10 reductions of the criteria and 13 tightening”.
