Highlights from Draghi's OMT Announcement

Highlights from Draghi's remarks:

• There was dissenting view at the meeting
• Draghi believes that the sovereign spreads (ie: Italy vs. Germany, etc)is based on unfounded fears, which he translates into a euro breakup
• Draghi comments that addressing these fears fall squarely within the mandate of the ECB
• "These decisions are necessary to restore our capacity to pursue the objective of price stability in the euro  area....are necessary to restore the singleness of monetary policy in the euro area."
• There is some talk about Article 123 being breached.
• Draghi says this is not the case.  Buying in the primary market would be a violation.  The secondary market is fair game.
• There was no discussion on additional LTROs
• Announces OMTs (Outright Monetary Transactions)
• Article 18 of the ECB justifies these transactions
• Repairing monetary policy transmission, recreating the singleness of monetary policy for the euro area
• In order to do this, governments have to take policy reforms as part of a programme
• Draghi believes that OMTs are an effective backstop to remove tail risk of Europe.
• OMTs will receive pari passou status (no seniority)
• ECB will maintain senior status on bonds purchased under SMP and other programs