Germany’s top court rules in favour of ECB bond-buying programme

By Friederike Heine and Helen Maguire, dpa

Berlin (dpa) – A bond-buying programme devised by the European Central Bank (ECB) four years ago to fight financial crises in the eurozone is compatible with German law, the country’s highest court ruled on Tuesday. Andreas Vosskuhle, president of the Constitutional Court, said that the Outright Monetary Transactions (OMT) scheme – which has never been activated, but allows the ECB to make unlimited purchases in secondary, sovereign bond markets – does not violate German law. Last year, the European Court of Justice (ECJ) found the OMT programme to be compatible with EU law, but German politicians and economists are concerned about the domestic fallout of buying up the sovereign bonds of countries in distress. The German Court had asked the ECJ for legal advice, which is different from delegating the entire case to the European level. Vosskuhle said that the judges remained concerned about aspects of the bond-buying programme, but were generally in agreement with the ECJ decision. “The European legal community has been strengthened by these proceedings,” he said after announcing the decision in Karlsruhe. The announcement marks a victory for ECB President Mario Draghi, who launched the OMT scheme at the height of Europe’s debt crisis in 2012 as part of his pledge that the ECB would do “whatever it takes” to save the euro currency.

“This judgement confirms the ruling of the Court of Justice of the European Union which concluded that the OMT programme is compatible with EU law and falls within our mandate,” Draghi told EU lawmakers in Brussels. Observers say Tuesday’s outcome could weaken a separate challenge to the ECB’s quantitative easing (QE) programme, which involves creating money to buy bonds and which the bank launched last year to hit its eurozone inflation target of just under 2 per cent.

 

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