ECB to go for the activation the OMT?

The OMT could still prove to be a valuable tool in the ECB's kit. The Governing Council could also decide to dig up its OMT programme. This allows the ECB to buy unlimited quantities of government bonds of specific Member States, if exit-speculations cause a tightening in that state's monetary conditions. 

The ECB can only activate the OMT for countries that are in a programme with the ESM. Therefore, Member States that are likely to be affected but currently not in such a programme will first need to file a formal aid request with the ESM. A precautionary conditioned credit line suffices for this purpose, implying that ESM support doesn't need to take the form of a full macroeconomic adjustment programme. 

First and foremost, the OMT has no ex-ante size limits. This makes the OMT potentially even more aggressive than the current asset purchase programme. The focus of the OMT is only on the short-dated (1-3 years) part of the bond spectrum, yet trickle-down effects should alleviate any pressure on thelonger end of the curve as well. 

This assumes, however, that the ECB abandons its self-imposed rule that it can't hold more than 33% of the bond's outstanding amount and really does 'whatever it takes'. Secondly, the purchases made under the OMT will be fully sterilized, meaning that this programme doesn't cannibalise from the existing asset purchase programme and the ECB could stick to its purchasetarget of EUR 60bn per month.

On the other hand, the recent Greek events have again demonstrated that requesting a credit line with the ESM could be a time-consuming process as both the ECB and the IMF need to make a thorough assessment of the Member State's economic and financial situation. Admittedly, this process is nowhere near as complex as it currently is with Greece, but speed is of the essence in the days following a Grexit.

"Given that there will be general elections in Spain and Portugal this fall, activating the OMT could have a significant political backlash and herald a significant shift in the balance of power in the European Monetary Union. This only as an option if the situation were to deteriorate much more than expected", says Rabobank.