The Outright Monetary Transactions, also known as OMT, is a program that allows the ECB to purchase bonds, under certain conditions, issued by Eurozone member states. It is aimed to offer the countries a better sustainment in overcoming the financial crisis. Today and tomorrow the Constitutional Court of Germany will decide if this practice respects the E.U. Law and the ECB’s commitment for keeping the price stability in the Eurozone. Germany is against this program because is considering the risk of leading countries to ignorance of implementing reforms which are mandatory in order to fight the financial crisis.
On the other hand, this program may be vital for E.U. in order to maintain the idea of the Monetary Union and strength of the block of countries. Moreover, officials are making assurances that this program is totally in control by having very strict regulations under which it can take effect and well established constraints on how much debt it can buy. Given those rules, the inflationary risks are excluded. Tomorrow, the Constitutional Court will announce its opinion regarding the constitutionality of this program, announcement which will agitate the markets. Considering the fragile situation of Eurozone, I believe that this program will be implemented sooner or later. Thus, the Eurozone will align with the other powerful economies and their portfolio of tools for defeating the financial crisis.