The best bet has always been that the way around the challenge posed to both the management of the euro zone’s QE and to the EU’s legal order posed by the recent ruling by the German Constitutional Court (the BVG) was going to be some sort of compromise — although, of course, it would never be described as such.
That compromise would have to include something that the BVG could treat as a satisfactory answer to its questions, and thereby avoid the necessity of trying to reconcile the irreconcilable views of the BVG and the European Court of Justice on the status of EU law within Germany’s constitutional order.
I wrote about some early signs of a compromise in the making the other day. And now here’s another.
The European Central Bank [ECB] has sought to resolve its stand-off with Germany’s highest court by publishing details of how its governing council debated the question of whether its bond-buying impinged on economic and financial policy.
Laying out how council members debated the pros and cons of its monetary policy, the ECB said there was “broad agreement” that the “negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability”.
But it said that “it could not be ruled out that unintended effects could increase over time and outweigh the overall positive effects,” adding that it was “important to continuously assess the effectiveness and efficiency of the monetary policy measures, their transmission channels and their benefits and costs”…
The move is designed to defuse the legal impasse with Germany’s constitutional court, which shocked much of Europe by ruling last month that Berlin officials and the EU’s top judges had not done enough to properly scrutinise the eurozone’s flagship bond-buying programme.
Best guess: This (or something like this) will be enough for the BVG.