Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
It is indeed a modest proposal but you are right to credit Mutti, as this is a major shift in German policy which perhaps only she could get away with.

But I have some questions:

  1. Would the BundesBank be breaking any EU law/regulations if it refused to participate in repurchase programmes that had been agreed in accordance with the ECB's statutes? In other words, could the EU bring infringement proceedings against Germany? I appreciate any such actions could have political repercussions in Germany, potentially increasing support for the AfD, but that is hardly the ECB's problem. They had no difficulty over-ruling Greek and Irish proposed actions on debt restructuring and not bailing out junior bondholders in Irish banks, so why not over-rule German non-compliance as well. Or is Germany simply to big to be told what to do?

  2. Is the Merkel/Macron proposal for the EU to borrow and spend €500 Billion a direct response to the Karlsruhe ruling? I.e. they are at last beginning to recognise the limits of monetary policy (in both economic stimulus and legal terms) and choosing to provide a fiscal stimulus instead? It would be a nice riposte to judicial over-reach if it was: If you want to block the ECB from trying to prevent the EZ going into even deeper depression, we will just use more direct means...

  3. I had always thought the EU was legally barred from borrowing to fund its budget: was I wrong to think that, and if not, how has that legal obstacle been overcome?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed May 20th, 2020 at 03:25:04 AM EST

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