ECJ: European Central Bank may buy government bonds – THE WORLD

The European Central Bank (ECB) must always buy the euro bailout government bonds. This was decided by the European Court of Justice (ECJ) on Tuesday in Luxembourg (Case C-62/14). A program of the central bank 2012 was lawful, the judges. “The program does not exceed the monetary powers of the ECB and is not contrary to the prohibition of monetary financing of member states”, said the Court.

Specifically went there to the ECB’s decision in the summer of 2012, under conditions necessary indefinitely to buy bonds issued by euro-crisis countries to keep these solvent. In practice, the ECB has this buying program called Outright Monetary Transactions (OMT) but never used. Even the announcement calmed the markets that admit even critics.

Judgment are ECB chief Mario Draghi backing the current buy-back program which has been running since March 2015 and with a volume of 60 billion euros is to push the economy on a monthly basis.

With the purchase of government bonds, the ECB expresses the interest of the affected country, the then less has to pay for loans and remains solvent.

The Court also notes that the OMT program also does not violate the principle of proportionality. The judges gave the ECB nevertheless respect the rules laid down by itself also observed: The central bank should – if they ever use the OMT program – comply with a minimum period and should not announce in advance their decision to purchase or the volume

.

The lengthy court dispute over the bond purchases is thus clarified the superior court. The Federal Constitutional Court had given the topic to clarify to the ECJ. In Karlsruhe the CSU politician Peter Gauweiler, the former Federal Minister of Justice Herta Däubler-Gmelin (SPD), the parliamentary group of the Left and the association “More Democracy” had complained. Nearly 12,000 additional plaintiffs joined

before the Federal Constitutional Court, the applicants were right to get:. The Karlsruhe judges came in February 2014 to conclude that the ECB has exceeded the OMT program their skills, because they could run 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 subject to the ECJ in Luxembourg, which has now decided otherwise.

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