The eurozone's permanent bail-out fund HAS BEEN ratified - with
conditions.......Germany's constitutional court has given the green light for
Germany's president to sign the €700bn European Stability Mechanism into German
law.
That takes away the danger of the bailout fund being blocked.
But there are also some key conditions:
1) The court has rules that German liability to the ESM must not
exceed €190bn without asking the Bundestag for approval.
2) Both houses of the German Parliament must be kept informed about
how the funds within the ESM are deployed.
No-one really has the courage to kill the Euro, nor do they have the where
with all to rescue it. How do people think the markets will react to yet another
plan about what we'd like to do if we had the balls/mandate.
Another important element in today's
court ruling: the judges are going to consider the bond-buying programme
announced last week by the European Central Bank.
German MP Peter Gauweiler asked the court to consider
whether the Outright Monetary Transactions (OMT) plan was also a violation of
German sovereignty, as it allows the ECB to buy unlimited quantities of eurozone
sovereign debt. Gauweiler's complaint failed to postpone
today's decision, but it suggests there could be further action from Karlsruhe
in the months ahead, as the judges examine whether OMT transfers German
sovereignty to the ECB.
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Following this morning's ruling, Jean-Claude Juncker, the head of the Eurogroup of finance ministers, has said that the ESM governing board will hold its inaugural meeting on October 8.
In a statement, Mr Juncker said that each of the 17 eurozone members will have one representative on the board. He said:
I take note of the decision of the German Federal Constitutional Court concerning the request for a preliminary injunction concerning the ratification by the German government of the treaty establishing the European Stability Mechanism (ESM) and the treaty on Stability, Cooperation and Governance in the Economic and Monetary Union (TSCG).
Taking full account of all elements of the ruling, I look forward to the completion of the outstanding procedures allowing for the Treaty Establishing the European Stability Mechanism to enter into force. I plan to convene the inaugural meeting of the ESM-Board of Governors in the margins of the Eurogroup meeting of 8 October in Luxembourg.
The TSCG will enter into force once twelve euro area Member States have ratified it, but not earlier than 1 January 2013.
Both treaties represent a major step forward towards closer fiscal and economic integration and stronger governance in the euro area. They are part of our comprehensive strategy to bolster the outlook for fiscal sustainability and growth in the euro area.
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