On the @bundesbank/@ecb/@BVerfG saga, just a couple of thoughts. In short, I think the @BVerfG's demands have been satisfied, but a precedent has been set. 1/x

Germany’s Bundesbank said it will continue to take part in ECB asset purchases bloomberg.com/news/articles/… @GeneralTheorist provided a compelling and informed analysis of the dynamics at play and how they might affect the outcome. There was a chance that @bundesbank would play hard ball & reject the @ecb's rather confrontational approach.

https://twitter.com/GeneralTheorist/status/1289296037753102338?s=20

2/x

"The EU itself is set to become one of Europe’s largest bond issuers" write @MAmdorsky & @TomStub in today's @FT.

But what type of debt instruments will the EU (via the @EU_Commission) actually issue?

Let's take a closer look. A (longer) thread. 1/x
ft.com/content/da0f71… First, we should not forget that the EU (via the @EU_Commission) has been in the markets for quite some time. As this July '20 Investor Presentation (ec.europa.eu/info/sites/inf…) shows, the EU currently operates 3 funding programs: the EFSM, the BoP program & MFA. 2/x

In case you missed it (I did) - on June 15, the @BVerfG (German Constitutional Court) dismissed a challenge against the @ecb's Corporate Sector Purchase Programme (CSPP): bundesverfassungsgericht.de/SharedDocs/Ent… (only in 🇩🇪)

A short thread 1/x The claimants essentially argued that (i) the @ecb CSPP violated the democratic principles, since the @ecb/@bundesbank conduct large-scale bond purchases without the involvement of the 🇩🇪 Parliament & (ii) the CSPP is an illegal economic policy (rather than mon pol) measure. 2/x

The @ecb responds to the @BVerfG: “The PEPP and the APP were proportionate measures under the current conditions for pursuing the price stability objective, with sufficient safeguards having been built into the design of these programmes...”

ecb.europa.eu/press/accounts… @ecb further explains: “the proportionality assessment of any monetary policy measure had to consider, among other things, the degree to which the measure contributed to achieving the monetary policy objective [...] and possible unintended side effects [...].”

The discussion on the limits of @ecb mon pol (rightly) concludes that EU Treaty change would ultimately be needed.

However, in the short-term, Art. 125(2) TFEU could prove useful, which allows the Council to "specify the prohibitions referred to in Art. 123 TFEU". 1/x The Council has indeed "specified" the meaning of Art. 123 TFEU in Council Regulation (EC) No 3603/93 (in December 1993). But this essentially means that the definition of the monetary financing prohibition rests on a Regulation that is 27 years old: eur-lex.europa.eu/legal-content/… 2/x

In March 2012, Greece implemented the biggest sovereign debt restructuring in history (+€200bn).

In May 2020, the @BVerfG rendered its final decision after 6 years of bondholder litigation.

[For an overview of the litigation, see my paper: papers.ssrn.com/sol3/papers.cf…] 1/x - To recall, +90% of 🇬🇷 sovereign debt was governed by DOMESTIC law, allowing 🇬🇷 to retroactively change the terms of the bonds.
- 🇬🇷 retrofitted a Collective Action Clause (CAC) to facilitate a bondholder vote on the restructuring through the Bondholder Act 4050/2012. 2/x

Today, I had the honor to give a presentation on the Lebanese sovereign debt restructuring to members of the @Harvard Club of Lebanon.

My presentation can be found here: drive.google.com/file/d/19cexHp…

The recording here: zoom.us/rec/share/6Msp… (Password: 6M*7.Y2p)

THREAD 1/x

https://twitter.com/dan_azzi/status/1265690621911728128

First, 🇱🇧 - like Argentina - has already been in a difficult financial situation when the #Covid pandemic hit. Yet, the context within which 🇱🇧 will restructure its debt should not be forgotten and the pandemic could give 🇱🇧 a stronger hand in negotiations. 2/x

My main take-aways from today's 🇩🇪 #Bundestag debate re the @BVerfG judgement on the @ecb's #PSPP:
- a nuanced and high-quality discussion (both by MdBs and experts)
- #Bundestag faces dilemma (required by @BVerfG to review @ecb policies, but unclear how) - a short thread 1/x

https://twitter.com/GrundSebastian/status/1264772752977862658

- Majority of experts recommended #Bundestag to exercise restraint and consider ECB Annual Report/regular hearings/MEP letters @Europarl_EN the appropriate channel to discharge accountability
- Should be easy for @ecb, which has already published a lot of information 2/x

Important proposal by some of the leading sovereign debt experts. The idea is for the @WorldBank & other DBs to set up "credit facilities" that would cover Corona-related expenses. Funding would come from private contributions to the credit facilities. A short review 1/x

https://twitter.com/BeckerFriedman/status/1250478737038114818

The Corona Credit Facility (CCF) would have preferred creditor status through the @WorldBank - i.e. it would be repaid ahead of private investors. On that basis, the CCF could make concessional loans to recipient countries without a huge credit risk for the @WorldBank. 2/x

In my new @DelorsBerlin Policy Brief, I argue that the limitless @ecb Pandemic Emergency Purchase Programme (PEPP) is LAWFUL, since the PEPP is (i) within the @ecb's mandate, (ii) proportionate, and (iii) compliant with the monetary financing prohibition. A short thread. 1/10

https://twitter.com/DelorsBerlin/status/1242866034232754177

(i) The PEPP is within the @ECB's mandate, as it seeks to repair monetary policy channels that were affected by the #Covid_19 pandemic. The @EUCourtPress confirmed in Gauweiler "that a programme to safeguard the appropriate transmission of monetary policy is likely to 2/10

The @ecb published the Decision on the Pandemic Emergency Purchase Programme (PEPP) today: eur-lex.europa.eu/legal-content/…. Spoiler: the APP issuer/issue limits WILL NOT apply to the PEPP. A short thread. 1/x @fwred @MehreenKhn @AGelpern @henrikenderlein @MarijnvdSluis @Smits1Rene 1x The PSPP issuer/issue limit (which limited purchases to 33% of a single Member State's debt instrument) will NOT apply to the PEPP: "To ensure the effectiveness of this decision, the consolidated holdings under Article 5 of the PSPP Decision should not apply to PEPP holdings."

I wrote a short preliminary analysis on the legality of the @ecb Pandemic Emergency Purchase Programme (PEPP) @SSRN ssrn.com/abstract=35586…. Thread. 1/x 2/x The announcement of the Pandemic Emergency Purchase Programme (PEPP) by the European Central Bank on March 18, 2020 marks an unprecedented step in the European history of monetary integration. But it is a commensurate response to the global public health emergency that the

1/ A restructuring of Lebanese Eurobonds poses formidable challenges, but it is not impossible. My two cents: start debt restructuring negotiations now, avoid a default, and understand the legal risks. Some of the latter I describe below (in the spirit of Buchheit's teachings).

https://twitter.com/AzarsTweets/status/1221045381833863168

2/ According to the Luxembourg Stock Exchange, Lebanon has 27 series of Eurobonds outstanding, all of which are governed by New York law and denominated in USD: bourse.lu/programme/Prog…. The fact that the bonds are governed by NY law is critical for their restructuring.

Below my new short paper on Argentina and sovereign debt restructuring challenges: papers.ssrn.com/sol3/papers.cf…

@AGelpern @MattHGoldmann @astridiversen @mweidemaier @colbyLsmith @RobinWigg @TimRSamples @KPatricio1 @Martin_M_Guzman @ManuelidesY @jzettelmeyer @Brad_Setser @PIIE 1/18 Argentina currently finds itself in a vulnerable financial and fiscal situation and a sovereign debt restructuring has become a real possibility - not only for financial markets but also the new administration. ft.com/content/ec4cb3… 2/18