Forex Flash: ECB's OMT inconsistencies - Commerzbank

FXstreet.com (Barcelona) - ECB President Mario Draghi has successfully muted Bundestag's criticism. Draghi explained that the OMT program aimed at convincing the markets that there is no risk of a peripheral country leaving the euro zone with the help of its bond purchases (Outright Monetary Transactions, OMTs), preventing national bankruptcy of a member state under all circumstances. However, that success depends on market belief that the required conditions won't be an obstacle: "So if the OMTs are to be successful the ECB has to create the impression that the conditions, which itself is proclaiming, are not to be taken too seriously", wrote analyst Ulrich Leuchtmann. "Without the conditions - as Draghi himself has admitted - monetary policy would be dominated by fiscal policy as a result of the OMTs, i.e. monetary policy would lose its ability to control inflation long term", Leuchtmann added, shocked by the EUR-positive image from these inconsistencies of the OMT strategy.