A few days before the meeting of the Governing Council of the ECB which will decide whether to keep interest rates unchanged, the Bundesbank warms up its engines and lets the written brief filed in Karlsruhe filter through, where the judges of the Constitutional Tribunal are examining the merits of the appeal against the ESM, the Fiscal Compact and the unlimited purchase program for government bonds, the so-called OMT extension. Yesterday morning, the business newspaper Handelsblatt exclusively published some excerpts from the twenty-nine-page text in which the German central bank accuses the program launched in September by the ECB and never used until now. In fact, the first public hearing to discuss the case will be held in June. In the order of last September, the Constitutional Tribunal had already put pen to paper that «the purchase of government bonds on the secondary market by the ECB, with the aim of financing the budgets of the member states independently of the financial markets, is prohibited, as it would constitute a circumvention of the monetary financing prohibition'. Now the question is whether the OMT violates the mandate of the ECB. Weidmann is convinced so. The reasons are various and have an economic rather than a legal nature. At least according to what was reported by the Handelsblatt. Firstly, the purchases would undermine its independence, since the bank would end up financing the Member States, thus making itself open to blackmail. Secondly, the purchases would end up distracting the ECB from its main task, which is to maintain price stability.
Among the reasons given by Mario Draghi to defend the programme, on the other hand, we find the need to prevent the spread between interest rates from having dangerous consequences for the real economy, in particular for corporate refinancing. A pragmatic objective, which does not go down well with the guardians of orthodoxy. For the Bundesbank, in fact, «higher refinancing costs for the private sector may reflect national financial risks. This evolution would not be fought through monetary policy instruments, but would be the direct consequence of the fiscal policy for which each member state is responsible". In this sense, therefore, Angela Merkel's overtures to monetary policy measures aimed at giving businesses a breather, expressed on Thursday in Dresden, are promptly disavowed by BuBa. In short, Germany maintains a double profile, at once hard and inflexible through the declarations of Jens Weidmann and reflective and open to dialogue through Chancellor Merkel. On 2 May we will know who wins in the Governing Council. Until now Weidmann has always had to accept bitter defeats.
