On Thursday, the 6th September the Governing Council of the ECB met in Frankfurt to discuss the latest development in the euro area. Eurogroup's president Juncker and the EC's Vice-President also attended the meeting that was supposed to present following steps of the ECB that could help solve the crisis of the common currency. The Governing Council of the ECB decided that the key interest rates remain unchanged. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain at 0.75%, 1.50% and 0.00% respectively.

The meeting itself was closely watched by markets, experts and political elites as the ECB was expected to undertake new monetary policy measures to tackle the still-worsening euro crisis. In his introductory speech, ECB’s president Mario Draghi announced the decision of the ECB to carry out Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area. He repeated that the euro is irreversible and he confirmed that the ECB will do whatever it takes to stabilize the situation.

He also stressed out the importance of a smooth implementation of the European Stability Mechanism, which is now unable to act due to the German Constitutional Court. On Wednesday, Germany’s Federal Constitutional Court will pass its verdict on whether the ESM breaches the principles of the German Constitution or not.

Moreover, the European Commission is expected to present a proposal of the banking union during the forthcoming plenary session of the European Parliament in Strasbourg on 10-13 September 2012. The proposal is to be presented on Wednesday with the vote of the EP on Thursday. The banking union should help ease the tensions connected with the monetary and debt crisis in the euro area.

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