Responsibility of States and Central Banks in the Euro Crisis

Expert report commissioned by the German Constitutional Court in 2013.

1. Regulatory reasons for the crisis

2. Refinancing credit and Target balances
2.1 Target balances
2.2 Target balances and fiscal rescue credit
2.3 The lowering of collateral standards for refinancing credit
2.4 Indirect state financing via refinancing credit to commercial banks

3. ECB government bond purchases and official bail-out programmes
3.1 From indirect to direct state financing: the SMP
3.2 The intergovernmental rescue funds: EFSF, ESM & Co.
3.3 Monetary policy or fiscal policy: ESM, SMP and OMT

4. The risks and costs of the ECB policy
4.1 Potential exposure via the OMT programme
4.2 Risks related to refinancing credits
4.3 Target losses in the case of exit and bankruptcy, should the euro continue to exist
4.4 Target losses in the case of a euro break-up or a German exit
4.5 Shift in growth forces due to free insurance coverage
4.6 The path dependency of policy
4.7 The creeping confiscation of savings

5. Economic assessment of ECB policy

6. Policy measures against interest rate spreads: the ECB’s justification
6.1 The economic importance of interest rate spreads
6.2 Discussion of the ECB’s arguments

7. Summary of key points