IMFS professors evaluate government bond purchases in the new PEPP program (FAZ)

The European Central Bank (ECB) plans to buy more than a third of government bonds of a euro area country within its new program launched in the corona crisis. The so-called PEPP program will have an envelope of 750 billion euros. In an interview with the German daily "Frankfurter Allgemeine Zeitung", three IMFS professors asses the announcement of the ECB.

According to Prof. Volker Wieland, the new program lies somewhere between two earlier programs: the OMT and the PSPP. Whereas the OMT has already been assessed by the European Court of Justice (ECJ), for the PSPP this process has not yet been completed. However, the OMT could only be effective if a country had applied for the ESM.

In the opinion of Prof. Helmut Siekmann, the limits for bond purchases are meant as an intention and are not legally binding. Prof. Roland Broemel emphasized that the practical implementation and the justification are decisive. In his view, this also applies to the limits of bond purchases.