OctaFX | OctaFX Forex Broker
Open trading account
Back

OMT in limbo? confidencial Buba document made public

FXstreet.com (Barcelona) - Further expanding on the news uncovered by the German newspaper Handlesblatt about the Bundesbank being opposed to purchases of government bonds via Outright Monetary Transactions also known as OMT, seen as an intrusion into the independence of the ECB, more details from the Bundesbank case made in Dec 2012 and sent in a secret document to the German constitutional court are coming to the surface.

As noted by Sebastien Galy, currency strategist at Societe Generale: "The Bundesbank explains that the ECB is not the lender of last resorts to European governments. More precisely it explains how a country's fixed income market and lending system could start to price in the risk of that country leaving, without it necessarily being linked to a problem of monetary transmission, but linked to particularities of a given country. The issue lies at the political level and not that of the mandate of the ECB."

More headlines on the Buba case were provided via Bloomberg:

- Bundesbank says outright monetary transactions could undermine independence of central banks

- Bundesbank doubts that strong conditionality will be imposed on countries in exchange for aid

- Bundesbank says the Greek experience "is reason for concern that the handling of conditionality within the framework of the OMT rogram, even in questionable cases, won't protect against significant purchases and thereby against a redistribution of risks across the balance sheets of the Eurosystem"

- Bundesbank says diverging borrowing costs for companies in different countries may reflect different fiscal risks of sovereign

Session Recap: GBP rises on UK GDP; USD declines on Jobless

The Sterling was the winner of the day as the pound rose against its major competitors on the back of the better than expected GDP data in UK. The GBP/USD advanced to trade above the 1.5400, the GBP/JPY tested 2-week highs at 153.75 and the EUR/GBP declined to 0.8400.
Read more Previous

Forex Flash: USD/CAD vulnerable of an extension lower – TDS

USD/CAD is last trading near fresh session and 9-day lows at 1.0202, selling off from yesterday's top at 1.0279. “We noted that short-term trend strength was easing yesterday and that 1.0234 support was key for the near-term view,” said Toronto based FX Research Team at TD Securities.
Read more Next
Start livechat