As I have said elsewhere7, central bank independence and a clear focus on price stability are necessary but not sufficient to ensure monetary dominance. The fiscal authority must be ready and willing to adjust its revenues and primary spending to stabilise its debt at any level of the interest rate that the central bank may choose.
In academic parlance, for monetary policy to remain active, fiscal policy needs to be passive, or “Ricardian”8. By creating the right environment, and providing appropriate incentives, for governments to take action to ensure fiscal solvency, OMTs create the conditions to affirm the monetary dominance regime which is at the heart of the Treaty.