Brussels / Luxembourg. “The European Central Bank is prepared to do everything within its mandate to ensure the survival of the euro. And believe me, it will be enough “- with these words, it is Mario Draghi succeeded, at the height of the euro crisis to stabilize the single currency in July 2012, to smooth things over on the European bond markets. The governor of the ECB promised namely, that the central bank in an emergency was willing, under certain conditions, to purchase the bonds of crisis-ridden members of the euro zone to prevent a collapse of the single currency.
Draghi’s announcement (which by the way so far no action followed) had indeed worked – but at the cost of a legal aftermath. For in Germany brought more than 12,000 people, led by the CSU politician Peter Gauweiler, action against the prophylactic resolved in September bond purchase program of the ECB (OMT, Outright Monetary Transactions) a. My main complaint: OMT is a covert policy measure which is prohibited by the central bank in reality. For according to the Statute of the European Central Bank is responsible for the monetary policy of the euro zone, but may intervene in any case in the daily operations of governments – for example by printing money to finance the national debt
The case ended up in. Constitutional Court in Karlsruhe, in turn, turned on the European Court of Justice and the first petitioned for a preliminary ruling in its history. On Wednesday of the Causa (Case C-62/14) entrusted ECJ Advocate General Pedro Cruz Villalón presented his opinion – keep in nine out of ten legal cases, the EU judges who will make their decision in the next six months, to the findings of the Advocate General. Villalóns Conclusion: bond purchases by the ECB are “in principle” with the EU Treaties compatible
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This OMT is legally compliant, the central bank must, however, meet some requirements. A prerequisite for the ECJ Advocate General is that the bond purchases are fully explained and on the secondary market, not immediately after the issuance of promissory notes, take place. Meaning: The prices of the securities must be determined in the financial market by the interaction of supply and demand and can not be set in a back room of the ECB – otherwise the boundary between economic and monetary policies would be blurred
Advocate General Cruz. Villalón locates the danger of crossing the border in another context: After participation is linked to concrete economic reform commitments on OMT program, the ECB could fall into the twilight, if they do not withdraw from the monitoring function. The crux. Currently, the central bank, together with the European Commission and the International Monetary Fund member of the so-called troika – responsible and thus directly for monitoring the reform efforts in the crisis countries
The Advocate ECJ Advocate General, thus leaving only a conclusion: The moment in which the ECB, the OMT program is activated, it must also withdraw from the troika. Whether the German constitutional court in Karlsruhe will be satisfied with this Conclusion remains to be seen – first, the Court must give its judgment. Advocate General Cruz Villalón gave the German Supreme Court in any case, a shot across the bow: The judges would “make a significant degree of restraint, as they specialization and experience is lacking, which owns the ECB in this area” their control of the ECB’s activities. [Reuters]
The Advocate General of the ECJ holds bond purchases by the European Central Bank with EU law, provided that the central bank to keep some requirements: You must give detailed reasons for the purchases, the bonds must not directly buy the issuer and must be in the sequence of economic surveillance in the context of the Troika (EU Commission, IMF, ECB) to withdraw. The Luxembourg Supreme Court judges will make their judgment in the Causa by mid-2015.
(“Die Presse”, print edition, 15/1/2015)
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