Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

27 November 2013

Irish Times: ECB spells out bond-buying programme conditions


Default: Change to:


Jörg Asmussen, one of the prime figures in the troika's management of Ireland's assistance programme, answered questions on Ireland's position vis-à-vis the OMT scheme in the wake of Ireland's bailout. Separately, Taoiseach Enda Kenny has been asked for his feedback on the troika.


Irish Minister for Finance Michael Noonan said last week that the decision to leave the bailout without a credit line meant Ireland was neither at an advantage nor a disadvantage in respect of the European Central Bank’s bond-buying programme, known as the Outright Monetary Transactions (OMT) initiative. Such remarks led the Irish Times to submit a series of questions to an ECB spokesman in Frankfurt on Ireland’s position vis-à-vis the OMT scheme in the wake of the bailout, which ends next month. The questions were answered by Jörg Asmussen.

Does Ireland’s decision to leave the bailout without a precautionary credit line from the ESM change anything as regards the Government’s right to access OMT from the ECB in the event of a crisis?

Ireland’s decision for a so-called clean exit had no direct implication on OMT, because even with keeping a credit line OMT would not have been available automatically. There is no such thing as a "right to access OMT". OMT is not a facility that can be "accessed"  even "applied for". OMT is something that the Governing Council of the ECB might consider to safeguard an appropriate monetary policy transmission in the euro area.

Is Ireland’s ability to access OMT aid from the ECB made any easier or more difficult by the Government’s exit from the bailout without a precautionary credit facility?

The decision of the Irish Government has not changed the position of the country concerning OMT. Ireland was not eligible for OMT and will not be after the 1 January. As the ECB’s press release of 6 Sept 2012 clearly states: having a full or a precautionary EFSF/ESM programme is a necessary condition for a country to be eligible for OMT, provided that they include the possibility of ESM primary market purchases. Ireland’s decision not to apply for a precautionary programme means it currently does not fulfil this necessary condition.

Is Ireland’s right of access to OMT confined to "systemic" eurozone risk or is a right of access for risks to Ireland which are not deemed systemic for the eurozone? What criteria apply?

OMT is only possible for countries that are using a full or precautionary programme. OMT aims "at safeguarding an appropriate monetary policy transmission and the singleness of monetary policy", so OMT always has to be warranted from a monetary policy perspective.

Full article


A survey which aims to evaluate the role and consequences of the Troika in Ireland has been sent to Taoiseach Enda Kenny. The Taoiseach, Minister for Finance Michael Noonan and Central Bank Governor Patrick Honohan have been given three weeks to respond to the questionnaire sent from the European Parliament, according to RTE's Morning Ireland.

The aim of the survey is to investigate the effectiveness and fairness of the EU-IMF Troika. Members of the European Parliament (MEPs) have drawn a document of 29 questions that are directed at the European Commission, European Central Bank and International Monetary Fund. A further nine questions are aimed at programme countries such as Ireland, Portugal, Greece and Cyprus.

After this three-week period, and on receipt of these completed documents, MEPs then plan to contact former leaders of these countries to find out their views. An international dimension with considered analysis will also be given by ECB President Mario Draghi, European Commission president Jose Manuel Barroso and IMF chief Christine Lagarde.

Full article © Independent.ie

See video: ESM/Regling discusses bailout exit, 4.12.13 © RTE



© irishtimes.com


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment