Second, the announcement of Outright Monetary Transactions (OMT) in 2012 removed the euro area break-up risk which was being priced into governments’ borrowing costs and the severe economic dislocation that would have occurred. Second, the announcement of Outright Monetary Transactions (OMT) in 2012 reduced the likelihood of a break-up of the euro area.
This risk was being priced into governments’ borrowing costs and would have resulted in severe economic dislocation. Nonetheless, the sovereign debt crisis left a damaging legacy on the euro area economy and laid the groundwork for the third phase of the crisis.