Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
"Rule" 123 will not be ignored, because the ECB cannot afford to open itself to successful legal challenges on it. The game is played on the interpretation. In February 2010 everyone lied through their teeth about the impossibility of buying sovereign debt in the secondary market. That was a deliberate stance to leverage market pressure to force a political agenda on Greece. They ended up buying bonds timidly later that year.

However, the ECB may start buying bonds in the secondary market again. Vicepresident Vitor Constâncio said as much last week:

We expect that within the time of the programme, the adopted measures will lead the balance sheet to return to the size it had in early 2012. We have of course, to closely monitor if the pace of its evolution is in line with that expectation. In particular, during the first quarter of next year, we will be able to better gauge if that is the case. If not, we will have to consider buying other assets, including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available. It would be a pure monetary policy decision, buying according to our capital key, within our mandate and our legal competence.
You see in the last sentence he's pre-empting German protests of unconstitutionality.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Mon Dec 1st, 2014 at 05:43:04 AM EST
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