Did the German Court do Europe a favour?

Key points • The European Central Bank's Outright Monetary Transactions (OMT) programme was a politically pragmatic tool to diffuse the eurozone crisis. But it did not deal with the fundamental incompleteness of the European monetary union. As such, it blurred the boundary between monetary and fiscal policy. • The fuzziness of this boundary did help in the short term but pushed political and economic risks into the future. • Unless a credible commitment to enforcing losses on private creditors is instituted, these conundrums will persist. • The German Court has helped by insisting that such a dialogue be conducted to achieve a more durable political and economic solution. • A study of its Pringle decision suggests that the European Court of Justice will also not rubber-stamp the OMT-and, if it does, the legal victory will not resolve the fundamental dilemmas.