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14 Jan 2015
ECJ Advocate General: OMT legal "on principle", extraordinary circumstances required
FXStreet (London) - In a non-binding opinion on the case of the legality of the European Central Bank’s Open Market Transactions programme, Advocate General Pedro Cruz Villalon of the EU Court of Justice in Luxembourg has said that the European Central Bank’s Open Market Transactions may be legal “on principle” providing certain conditions are met.
The ECJ has been deliberating over the question of whether OMT are incompatible with Article 119 and Article 127(1) and (2) of the Treaty on the Functioning of the European Union and with Articles 17 to 24 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank because it exceeds the monetary policy mandate of the European Central Bank and encroaches upon the competence of the Member States.
The ECJ advocate general said this morning that the programme is legitimate so long as there is no direct involvement in financial assistance programme that applies to state in question and that the ECB must have a broad discretion “courts must exercise a considerable degree of caution”.
The ECJ official also stressed that the ECB must name "extraordinary circumstances" to launch OMT.
The ECJ has been deliberating over the question of whether OMT are incompatible with Article 119 and Article 127(1) and (2) of the Treaty on the Functioning of the European Union and with Articles 17 to 24 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank because it exceeds the monetary policy mandate of the European Central Bank and encroaches upon the competence of the Member States.
The ECJ advocate general said this morning that the programme is legitimate so long as there is no direct involvement in financial assistance programme that applies to state in question and that the ECB must have a broad discretion “courts must exercise a considerable degree of caution”.
The ECJ official also stressed that the ECB must name "extraordinary circumstances" to launch OMT.