The Eurozone crisis for all intents and purposes ended in Summer 2013 when the ECB unveiled its ‘OMT’ program. The program would allow the ECB to backstop government bond markets (in an unlimited manner) provided said governments entered into oversight and restrictions.
The ECB hasn’t actually employed the program ever, but just the knowledge that the program existed has drastically calmed bond markets, and ended fears that a peripheral country would go bankrupt.
The ECB was always kind of threading a needle on this one. The Eurozone rules state that the ECB can’t bail out countries this way. The ECB’s argument is that it’s not bailing out countries, but ensuring the smooth conduct of monetary policy — something that can’t happen if government bond markets are going haywire. Clever.
Anyway, this kind of thing never plays well in Germany, where they don’t like the ECB threatening to use its printing press.
This morning, the top German court ruled that it didn’t like the OMT program and say legal problems with it, but that ultimately it would punt to the European Court for Justice, rather than invalidating the program. You can read the decision here.
Things aren’t settled, but this court is less likely to strike the OMT down, and so it probably stays. The Euro briefly dipped earlier on the news, but has since recovered.