tailwind for the Euro-rescuers to ECB President Draghi: The European Court approves government bond purchases in principle. The plaintiffs hope now to the Federal Constitutional Court. Karlsruhe could at least limit the risk German supreme court.
The European Court supports the anti-crisis policy of ECB President Mario Draghi and declared the purchase of government bonds in principle legal. Completed However, the controversy over the role of the monetary authorities in the euro bailout by the Luxembourg judgment of Tuesday is not: The Federal Constitutional Court will consider what means the decision of German constitutional law. The plaintiffs are hoping for a word of power from Karlsruhe. To current bond purchases of the European Central Bank (ECB) is not here, but to an earlier program in the summer of 2012.
program “Outright Monetary Transactions”
The buy-back program with the name ” Outright Monetary Transactions “(OMT) was lawful, the European Court of Justice (ECJ):” The program does not exceed the monetary powers of the ECB and is not contrary to the prohibition of monetary financing of Member States’, the Court ruled (Case C-62 / 14).
As the euro zone was in the summer of 2012 at the abyss, the ECB had decided, if necessary, without limit to buy bonds under conditions of Euro-crisis countries. Government bond purchases a central bank press the interest of the country concerned, which then has to pay less for loans and remains solvent. The OMT program was used never, alone announcement calmed the markets.
“Justice contradicts the recommendation of the Constitutional Court”
Critics complain that the ECB, to finance over bond purchases illegally sovereign debt by printing money. Among others, the CSU politician Peter Gauweiler, ex-Minister of Justice, Herta Däubler-Gmelin (SPD), the parliamentary group of the Left Party and the association “More Democracy” – – before the Federal Constitutional Court, the applicants had received legal.
The Karlsruhe judges came in February 2014 concluded that the ECB had exceeded its powers with the OMT program. The central bank should operate no independent economic policy, according to the EU Treaty. In addition, the OMT-decision against the ban on co-financing from national budgets contrary.
Karlsruhe was the theme for the clarification of EU law to the ECJ. “The ECJ ruling contradicts in the most points of the recommendation of the Constitutional Court. The judges of the Constitutional Court must now decide whether they want to go on a collision course with Europe and the European Court of Justice”, the President of the German Institute for Economic Research (DIW), Marcel Fratzscher commented , ECB board member Yves Mersch said: “There is a sense of satisfaction that the European Court of Justice has confirmed that we have done our work earnestly and our responsibilities have become righteous.”
Fuest: “. The Court is mistaken That’s fiscal policy and no monetary policy”
Mr Gauweiler and his counsel, the law expert Dietrich Murswiek, the Luxembourg judgment called however “a declaration of war” at the Federal Constitutional Court. Ifo chief Hans-Werner Sinn spoke of a “regrettable error” of the ECJ and appealed to the Federal Constitutional Court, “undeterred” to let. Meaning designated successor, the current ZEW President Clemens Fuest reiterated: “The Court is mistaken The OMT program is a bailout by the ECB for the heavily indebted peripheral countries which is fiscal policy and monetary policy no…”
Left Party leader Gregor Gysi told Deutsche Presse-Agentur: “A bit like God, the ECB has remained, but it is then but has also been restricted again in its likeness to God.” Although the ECJ found that the OMT program does not violate the principle of proportionality. The judges gave the ECB, however, before that set by itself rules also comply with: The Federal Reserve had to – if you ever use the OMT program – comply with a minimum period and should not announce in advance their decision to purchase or volume.
ECB pumped 60 billion euros of cheap money in markets – monthly
Now, the highest German court must determine the Luxembourg judgment. Whether there is a new hearing, the Senate must still decide said a court spokesman in Karlsruhe. There are many indications that Karlsruhe will negotiate June 2013 for the second time on the complaints. For now, two judges have resigned and their successors have to come with the other six Senate colleagues on the same level.
In fact, is the Luxembourg judgment ECB backing even at its current buy-back program: Since March 2015, the central bank buys government bonds on a vast extent of all euro countries. Monthly to 60 billion euros will be pumped to cheap money in the markets. That should push the economy and fuel inflation.
The financial expert of the Greens Bundestag, Gerhard Schick, expressed relief that the Court had the capabilities of the ECB does not cut, particularly in view of the tense situation in the debt dispute with Athens. That the debate about a Greek exit from the euro area (“Grexit”) “has not triggered financial market chaos in Spain and Portugal, is only because the ECB is willing to buy the bonds of these countries need.” Athens is struggling for months with the international donors to new billion.
No comments:
Post a Comment