Karlsruhe, ECB and shock scenario: future without Germany?


What until recently seemed impossible, becomes a scenario on which you start to think. Mind you, we move in the slippery field of hypotheses but there is more than one clue.

In the event that the Bundesbank should evade the Plan Quantitative Easing in following the recent ruling by the German Supreme Court, which made observations on the Eurotower asset purchase plan and took time compared to an immediate unconstitutionality ruling, the ECB in order not to stay with the match in hand, study the so-called Plan B.

FUTURE WITHOUT BUBA? – To launch the bomb indiscretion, it is Reuters. A move, the one that would be preparing the European Central Bank, halfway between an excessively scrupulous attitude and something more than a mere exercise in style: on the plate, in fact, there is the possibility – at the moment still remote but not to be excluded a priori – of having to prepare for the worst of scenarios. We are talking about a future without Bundesbank, whose hypothesis of leaving the QE Plan would be one of the possible consequences of the rejection of the “explanations” provided by Eurotower to the German Court. But there is more: the Bundesbank should also sell the German securities purchased so far with the ECB called to take responsibility for compensating for the missing purchases.

For this, Eurotower would be working on a contingency plan to ensure the continuation of all purchase programs PSPP (Public Sector Purchase Program) should it lose the his most valuable piece, the majority shareholder. Nor is it excluded the possibility of taking legal action against Buba to force it to participate in the purchasing scheme as well as the hypothesis – decidedly impracticable – of taking over other eurozone central banks in the role of pro-quota buyer of the Bund .

In the end, the obstacle should be circumvented according to many, it will be the Bundesbank to “shield” the Frankfurt Institute since many are asking themselves a question.: can the EU exist without Germany?

Meanwhile, today, the President of the ECB, Christine Lagarde, in a live Web intervention with young people to talk about the impact of the health emergency on the economy, people and economic actors, anticipated that the crisis generated by the Covid-19 epidemic will cause a fall in the Eurozone’s GDP including ‘8% (medium scenario) and “slightly more than 12% (more severe scenario).

More generally, as is known, the scenario remains dominated by the uncertainty in which, among other things, the growth of public debt could reactivate speculative attacks on Italian titles. For now, Eurotower notes, purchases through the 750 billion pandemic program launched in March by Christine Lagarde have worked, stabilizing the markets but it is impossible to predict with certainty what it will happen.

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