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.
Conclusion Let me just conclude, by repeating: OMTs are necessary from a monetary policy perspective; they were effective in counteracting the destructive market turmoil in the summer of last year; and they are designed in a way that overcomes the key concerns associated with government bond purchases by the central bank. OMTs are not just words: the ECB is fully prepared to use them.