FXstreet.com (Barcelona) - The main focus today will be firmly on the German Constitutional Court’s ruling on the legality of the ESM and the Fiscal Compact (10:00CET).
According to Carsten Brzeski, Senior Economist at ING, Technically speaking, the German Court will not definitely decide on the ESM on Wednesday but will only decide on the requests for so-called interim relief. "The final verdict will probably only come in 2013. However, it looks unlikely that the final verdict will be different from today’s preliminary assessment. In case of a positive verdict, it looks likely that German president Gauck will finally sign the ESM Treaty." he explained.
Christian Lawrence, analyst at Rabobank agrees thatr a ruling against the ESM "looks very unlikely and so the market’s response will likely depend upon the degree of conditionality that might be attached to a 'yes' ruling." Lawrence also explained that on the “light” end of the scale would be a stipulation that the Bundestag must be in involved in the decision to deploy ESM resources, while at the more onerous end of the scale would be a limit for German liabilities or the insertion of an opt out clause. "There is also the risk (though we see this as very small) that the Court might consider a referendum necessary if Germany is to agree to more European integration – this necessitating an amendment to the constitution," he concluded.
According to Carsten Brzeski, Senior Economist at ING, Technically speaking, the German Court will not definitely decide on the ESM on Wednesday but will only decide on the requests for so-called interim relief. "The final verdict will probably only come in 2013. However, it looks unlikely that the final verdict will be different from today’s preliminary assessment. In case of a positive verdict, it looks likely that German president Gauck will finally sign the ESM Treaty." he explained.
Christian Lawrence, analyst at Rabobank agrees thatr a ruling against the ESM "looks very unlikely and so the market’s response will likely depend upon the degree of conditionality that might be attached to a 'yes' ruling." Lawrence also explained that on the “light” end of the scale would be a stipulation that the Bundestag must be in involved in the decision to deploy ESM resources, while at the more onerous end of the scale would be a limit for German liabilities or the insertion of an opt out clause. "There is also the risk (though we see this as very small) that the Court might consider a referendum necessary if Germany is to agree to more European integration – this necessitating an amendment to the constitution," he concluded.
