We have had a new paper published through The Bruges Group.
It is about the ECB’s new QE programme, called the PEPP or Pandemic Emergency Purchase Programme.
The sub-title of the paper encapsulates it very nicely: “the undermining of the Eurozone as a free financial market, the epitome of the failure of the Euro project, and a coup d’état by the European Central Bank”.
The paper analyses the PEPP against the criteria used by the German constitutional court to rule on the ECB’s pre-existing QE programme for public sector bonds (the Public Sector Purchase Programme or PSPP), and concludes that the ECB has blown away any and all safeguards and controls that pertained to the pre-existing PSPP and from which the court took comfort.
In doing so the ECB has put itself beyond the democratic control of any EU member state, and in fact it has separated itself from the control of the organs of the EU itself.
At the same time the PEPP completes the undermining of the Eurozone as a free financial market, and of its reincarnation as a controlled financial market: the ECB has bought up the bond supply itself and through its “concert party” of related entities, and brought about zero yields, diminishing liquidity and two versions of safety (i) total if you believe the EU and their helpmeets the ratings agencies, or (ii) poor and sliding if you consider the evidence.
All of this begs the question of whether the UK, with its free financial market, should connect itself porously with the controlled EU financial market, an arrangement that can only be to the UK’s detriment with the contagion risk it brings. There can be no “equivalance” between the one type of market and the other.
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