From an economic viewpoint two aspects are of outstanding importance:
1. President Draghi’s rhetorical intervention in July 2012 inLondonwas extremely effective. Since then not only have risk premiums on eurozone government bonds fallen dramatically, but there are also signs that the situation on the money markets is returning to normal and bank confidence is returning. The looming collapse of the cross-border interbank market in 2011 and 2012 has been averted. Cross-border holdings in the eurozone countries are rising again. Financing conditions for companies on the capital markets have improved considerably inGermanyand other eurozone countries. This positive development has allowed the ECB to forgo interventions on the government bond markets – indeed, it is the only major central bank not to have purchased any government bonds for over a year. This should also be borne in mind in any legal discussion of the pros and cons of the bond purchasing program.
2. For Germany, President Draghi’s announcement in July 2012 and in the months thereafter have by no means had a negative, but rather an extremely positive impact. Had the ECB not acted to stabilize the euro, Germany would have doubtless been confronted today with massive financial demands. For one thing because individual eurozone countries would have been cut off from the capital markets and reliant on supportive loans. And for another, because a probably not inconsiderable number of banks would have been hit by a shortage of capital and liquidity outflows and would also require supportive loans from their eurozone partners. Such a scenario would have had catastrophic repercussions for the economy and would have placed a considerable burden on tax payers in stable countries. The ECB’s decision last summer to prevent such a scenario with admittedly potentially far-reaching means is also warranted on economic grounds.