European Court of review of WTO facilitates new program … – Business Journal – Portugal

European Court of review of WTO facilitates new program … – Business Journal – Portugal

European Court of Review for WTO facilitates new debt purchase program

The opinion of the Advocate General of the European Court of Justice, in favor of the program of 2012 debt purchase for countries under adjustment programs, facilitates new debt purchase program extended debate on the ECB, many economists argue.

The favorable opinion of the Advocate General of the European Court of Justice to the WTO, the government debt purchase program created in 2012 to respond to countries in difficulty and under adjustment programs (known as OMT), makes life easier for those who argue that the ECB should proceed with a new debt purchase program, but now extended to the Eurozone, and aim to ensure that the risk of deflation. This is the opinion of many economists of international banks in response to the opinion issued Wednesday, the 14th.

Christian Schulz, senior economist at Berenberg Bank in London, said in a note to clients that the Business had access to the conditions laid down by Advocate General, should they be confirmed by the Court in the final decision expected in four to six months, are “minor” (ECB inability to participate in defining policies under adjustment programs ; need to justify in detail what means that it has to use the program;. requirement to avoid market price distortions)

The economist adds that this view “makes it very likely that the ECJ will authorize WTO in its final verdict within four to six months “and” also means no additional legal obstacles in the way of a quantitative ECB relief program [including public debt], for which we see a 90% probability to be announced in the next two meetings. “

” These are definitely good news for the ECB, “said in turn to Bloomberg Thomas Harjes, senior economist at Barclays in Frankfurt . “We consider that the opinion of today is a green light to the ECB’s OMT and potentially for a quantitative easing program that includes government bonds and sharing of potential risk in the event of sovereign default and debt restructuring.”

Jonathan Loynes, chief economist at Capital Economics in London, told The Associated Press that the decision “seems clear the way” for a more waterlogged debt purchase program next week. And on the same line was also Greg Fuzesi, JP Morgan, which cited by the Wall Street Journal writes that the opinion “is in favor of quantitative easing with public debt.”

Yves Mersh, member of the Executive Council ECB, told Reuters, welcomed the decision of the court relating to the WTO, but stressed that this is limited to the program, so it has no direct implications for a possible expanded program of buying government debt. So also highlights also that the opinion gives the ECB a broad definition of capacity in adopting policies.