the ecb ’ s mandate in that it pursues monetary policy objectives. as in the gauweiler case, the measures designed to preserve the monetary policy transmission mechanism may be regarded as seeking to maintain price stability. let me add that the argument invoking the transmission mechanism cannot be used to ease credit risk premia which are due to the idiosyncratic economic and financial situation of a country. second, in accordance with the pepp decision, “ purchases shall be carried out … to the extent deemed necessary and proportionate ”. 3 the proportionality assessment of the pepp must be supported by economic analysis which shows that the measure : ( i ) is suitable for attaining the monetary policy objective in current and future environments ; ( ii ) does not go beyond what is necessary in order to achieve this objective ; and ( iii ) weighs up the various interests involved to prevent any disadvantages which are manifestly disproportionate to the objectives set. in this context, the governing council assessed the pepp ’ s potential impact and direct and indirect effects, and took into account comparative elements and counterfactual scenarios to ensure that it was “ the most effective and efficient tool for providing additional monetary accommodation in the current environment ”. 4the governing council considered the pepp to be the most appropriate instrument compared with a recalibration of standard policy tools, such as interest rate cuts. in the weiss judgement, the european court of justice confirmed that the ecb must be allowed broad discretion in making these complex assessments, but within strict criteria. the pepp complies with the proportionality principle as it is both suitable and necessary to attain the monetary policy objective. the pepp contains important safeguards, such as stringent eligibility criteria also contained in the app. however, on account of its flexibility, these stringent criteria are arguably fewer under the pepp than under the app. this is why the pepp must be strictly temporary in nature ( the temporary nature also becoming a stringent criterion ) and targeted to comply with those strict criteria. last of all, although the ecb decided not to apply issuer and issue limits, the allocation of public sector purchases will be guided by the capital key of the ncbs. the pepp ’ s flexibility should not undermine the safeguards and limits set by the ecb in its 2 / 5 bis central bankers'speeches purchase programmes to keep within the constitutional red lines i mentioned earlier. even if the extraordinary context of the crisis might

yves mersch : legal aspects of the european central bank ’ s response to the coronavirus ( covid - 19 ) pandemic – an exclusive but narrow competence keynote speech by mr yves mersch, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the escb legal conference, frankfurt am main, 2 november 2020. * * * exploring the legal framework governing the ecb ’ s actions – scope and general legal principles when exploring the scope of our actions we are cognisant that the ecb has exclusive but narrow competence to define the european union monetary policy for the purpose of maintaining price stability. moreover, the european court of justice has consistently held that the ecb enjoys broad discretion in defining monetary policy within its mandate to pursue the objective of price stability. discretion without limits increases the risk of arbitrariness. therefore the court has insisted on being able to control this discretion on the basis of the criteria that some refer to as the self - imposed constraints. furthermore, we are bound to respect certain established legal principles. our measures must be proportionate to the ecb ’ s legitimate objectives. they must not undermine the spirit of the “ no bailout clause ” and must also comply with the prohibition of monetary financing, which is its monetary policy counterpart. last of all, the principle of an open market economy in which resources are allocated efficiently must also be respected. these are the constitutional red lines for our actions. our bold monetary policy response to the pandemic provides ample liquidity and acts as a backstop : the liquidity provided via the targeted longer - term refinancing operations ( tltros ) and the pandemic emergency longer - term refinancing operations ( peltros ) both of which are supported by collateral easing measures, in addition to asset purchases through the continuation of our asset purchase programme ( app ) and the launch of our pandemic emergency purchase programme ( pepp ). these measures endeavour to respect the principles i have just mentioned in order to be legally sound. first, all the instruments deployed in response to the pandemic are provided for in primary eu law ( article 18. 1 of the statute of the escb ) : to achieve its objectives, the ecb may operate in the financial markets by buying and selling marketable instruments outright, and may conduct credit operations based on adequate collateral. second, the crisis measures taken pursue monetary policy objectives with due respect