The Bundesbank: ECB massively exceeds its mandate
It's no secret that the Germans are negative to further financial support of the weak euro countries. Germany's current strategy is inaction to the calls of introducing Eurobonds or Germany to leave the Euro. What they dread is the other option - that a weak country would leave the euro and its implications on... Germany.
The hardline central bank - known as the temple of monetary orthodoxy - told Germany’s top court that the ECB’s pledge to shore up Italian and Spanish debt entails huge risks and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” it wrote in a 29-page document leaked to Handelsblatt.
The Bundesbank unleashed a point by point assault on every claim made by ECB chief Mario Draghi to justify Outright Monetary Transactions (OMT).
The document said OMT entails the purchase of “bad bonds”, violates ECB independence and entails a high risk of heavy losses in the “not unlikely” event that debtor states are forced out of EMU.