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A short #thread on the #Karlsruhe decision on the legality of the @ecb's #QE #PSPP ... (NOT #PEPP or #Covid QE)

My overall assessment ...

It's not good ... 3 or 4 /10 where 10/10 would have been carte blanche for the #ECB and 0/0 "QE is verboten", a disaster for the #Eurozone
First the headline bombshell "ECB decisions on the Public Sector Purchase Programme exceed EU competences" is a BIG deal ... the @BVerfG has directly accused the @ecb of violating the #EU constitution and the @EUCourtPress and #German government of complicity in this violation!
More precisely, #BverfG says the #ECB violated Art 5(1) and 5(4) on "#proportionality" by failing to demonstrate that it considered the "economic effects" of #QE before launching it, and that #Germany and the #ECJ failed to hold the Governing Council of the #ECB to this standard!
To add fuel to the fire (but in line with its finding that the #EU constitution is being violated) it explicitly asks the #German government "to take active steps against the #PSPP in its current form"
Most starkly, it explicitly asks the @bundesbank (which is the biggest buyer of #QE bonds) to stop its participation in 3 months or less, unless the @ecb actively demonstrates that the principle of #proportionality was respected and "economic effects" fully taken into account
However the BIGGEST impact of the #BVerfG judgement, that had a HUGE 7:1 majority would not be on #PSPP, where it is likely that a compromise would be found between the @ecb @bundesbank and the German Federal Government on satisfying the "proportionality" criteria
BUT it will be on seriously constraining the flexibility afforded to the @ecb on #PEPP and other future #QE. In its judgement the #BVerfG explicitly says that "capital keys" and "issuer limits" were key to its finding that #PSPP did not violate "monetary financing". BAD for #PEPP
In summary

1) Bad sign that #Karlsruhe so explicit in condemning the #ECB #ECJ #Buba & #German Government. An opening salvo for future confrontation.

2) A compromise will be found for #PSPP for sure

3) #PEPP is safe for now, but "shots fired".

4) A more conservative #ECB
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