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On May 5, the ruling on the participation of the Bundesbank in the purchase of bonds. Investors trust a green light. German President Steinmeier: “We are wrong in Europe when we only consider our national economic interest”
by Alessandro Graziani
2 ‘reading
For Borsa and BTp, the first week of May 2020 is approaching high voltage. Is going to end Friday 8 with the rating of the sovereign debt rating of the two rating agencies Moody’s and Dbrs that will be pronounced after the status quo, announced by S&P Global, and the downgrade decided by Fitch.
But before, on Tuesday May 5, there is another event capable of affecting the markets: the German constitutional court will pronounce, after the postponement of the session scheduled for March 24, the legitimacy of purchases of securities of the ECB in the context of quantitative easing. Or rather: the decision of the judges will refer participation in the Bundesbank purchasing program.
What will the Karlsruhe judges decide? The investors’ expectations, to read the reports of the investment banks, are to give the green light to the continuation of the QE that, in addition, was approved by the ECB with the favorable vote of the Governor of the Bundesbank also in the recent version of the Pepp program expanded to after the emergence of the coronavirus.
A rejection by the German Court would exclude the Bundesbank’s participation in the purchases but, formally, it would not block the ECB’s Qe.
However, from the legal point of view and, therefore, from the political point of view, it would be a sign of a crisis of European unity that would undermine, say some analysts, the foundations of the euro zone. In the Financial Times, the editorialist Wolfgang Munchau wrote that the German Court’s decision is unpredictable but that, in any event, it highlights the limits of European governance that need a revision of the Treaties.
While waiting for the German judges to rule, the President of the German Republic Frank-Walter Steinmeier sent a clear signal at the weekend need for true european solidarity. In an interview with Frankfurter Allegemeine filmed by Ansa, Steinmeier said that the EU has “the opportunity to do the right thing, together we can contribute to the recovery of Europe.” Adding that “we are wrong in Europe when we look only at our national economic interest. Let’s see, for example, how much the metropolitan area of Munich is connected to that of Milan. Or how Volkswagen buys 20 thousand components from Italy». “This shows, concluded the German President, that Germany can be just fine if we don’t neglect our neighbors. “
