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11 Feb 2014
Flash: Implications of the German Constitutional Court decision- BBH
FXStreet (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman said investors are still debating the implications of the German Constitutional Court decision at the end of last week.
Key Quotes:
"There has not been an adverse market reaction to the 6-2 majority opining that the ECB overstepped its authority in OMT, but sought a preliminary ruling by the European Court of Justice, which is the arbiter of treaty violations."
"In some ways, because OMT has not been operative, this seems vaguely hypothetical. On the other hand, the legal quagmire likely rules out some of the bolder initiatives, like QE that some observers have been advocating."
"The issue likely will become more salient, when/if stress levels rise again in the euro area. Lastly, we see some parallels with Roosevelt's New Deal in the US, where substantial parts were eventually ruled unconstitutional."
Key Quotes:
"There has not been an adverse market reaction to the 6-2 majority opining that the ECB overstepped its authority in OMT, but sought a preliminary ruling by the European Court of Justice, which is the arbiter of treaty violations."
"In some ways, because OMT has not been operative, this seems vaguely hypothetical. On the other hand, the legal quagmire likely rules out some of the bolder initiatives, like QE that some observers have been advocating."
"The issue likely will become more salient, when/if stress levels rise again in the euro area. Lastly, we see some parallels with Roosevelt's New Deal in the US, where substantial parts were eventually ruled unconstitutional."