"The ECB’s Toxic Bond-Purchase Program" (Der Standard, Project Syndicate)

In an opinion piece via Project Syndicate Lars P. Feld, Clemens Fuest, Justus Haucap, Heike Schweitzer, Volker Wieland and Berthold U. Wigger of the Kronberger Kreis argue that it is unclear why the European Central Bank has introduced a new asset-purchase instrument instead of using its existing Outright Monetary Transactions (OMT) Program. By shielding countries from both market forces and political commitments, the Transmission Protection Instrument (TPI) risks destabilizing the European monetary union.

In practice, it is hardly possible to determine precisely which interest-rate premia are justified from a fundamental perspective. Moreover, this is "primarily a task of fiscal policy, not monetary policy task: The objective is for individual countries to finance their national budgets on appropriate terms."

In their view, it is not acceptable that individual countries should be supported with government bond purchases without conditions. "It is unclear why the ECB has introduced a new asset-purchase instrument instead of using  the OMT program," the members of the Kronberger Kreis write in their joint article. "By shielding countries from both market forces and political commitments, the ECB's new TPI risks generating its own toxic effects on the stability of the European Monetary Union", they add.

Project Syndicate: "The ECB’s Toxic Bond-Purchase Program"

Der Standard: "Das Anti-Fragmentierungs-Instrument der EZB ist toxisch"