FAQ: Can the ECB unlimited buy government bonds? – Tagesschau.de

Date: 06/17/2015 00:07 clock

The ECJ has the ECB’s government bond purchase program “Outright Monetary Transactions” approved. The Federal Constitutional Court had passed such actions to him. explains what it is exactly.

‘{‘ action ‘: {‘ default ‘[' toggleBody ']}} “ What is in the process

It’s about the purchase of government bonds by the European Central Bank (ECB). In July 2012, ECB President Draghi announced that his bank will do everything that is needed to solve the European debt crisis). On September 6, 2012 in Frankfurt, Draghi appeared before the press. He announced a program called “Outright Monetary Transactions” (OMT). The content: The ECB would in an emergency on the so-called “secondary market”, so buying in the financial markets, in unlimited amounts of government bonds crisis states.. For this purpose they will print money in the necessary amount. So will the speculators deprived the soil in the bond markets. As a result of falling interest rates, for which the crisis Equip able to organize fresh money to. In return, the states would have under the bailout ESM go (which is linked to conditions, for example to tackle certain reforms). The purchase can take place in an unlimited amount, as Draghi. To date, the OMT program was not implemented. The fundamental question behind the dispute is: What are the legal limits must respect the independent ECB? And how intense that is controllable by the courts?

The focus was initially in 2012 the establishment of the permanent European rescue fund ESM. Against the German participation in the ESM 2012 actions before the Federal Constitutional Court were filed in June. The nervousness was great. Would fail to Karlsruhe the Euro rescue? On 12 September, the decision was announced in summary proceedings. A few days earlier on September 6, came the press conference Draghi to the controversial government bond program. As soon could give the impression:. No matter what limits the ESM your demands, dear German judge, we in any case will intervene in an unlimited amount in the markets

The Federal Constitutional Court later the German participation in the ESM approved in principle. With one exception: The controversial OMT program could the Federal Constitutional Court’s view, violate the European treaties, because the ECB thus exceeded the tasks assigned to it. This legal issue has Karlsruhe excluded and submitted to the European Court of Justice (ECJ) in Luxembourg.

Why can individual citizens proceed in court against actions of the ECB

Overall, the action before the Federal Constitutional Court of approximately 37,000 German citizens will support. The ECJ, however, not joins the classic “of appeal” a. So who loses as a citizen before the Federal Constitutional Court, can not simply pull themselves to Luxembourg. For ECJ you come as individual citizens only through the “detour” of the national courts. If rules are relevant from the European law for deciding the national courts must submit to the ECJ the questions. Luxembourg then decides how the EU legislation is to be understood, and are the case back to the national court, which makes the final decision. Other important processes such as the “right to be forgotten” on Google or the data retention are come to Luxembourg.

What are the problems relating to the purchase of government bonds by the ECB

According to the Basic Law (Article 88 paragraph 2) must Germany transferred the responsibilities of the central bank of the European Central Bank, the independent and the primary objective of” price stability is “committed. The ECB is independent, so the governments have no direct influence on their actions. But of course it is linked to the tasks that you assign the European treaties (Article 119 et seq.). Legally it therefore comes to the question of whether the ECB exceeds the competencies, so does something for which it is not responsible to the European treaties. Task of the ECB is the, with the aim of a stable currency to ensure stable prices. Not allowed, however, is: and by the ECB, ie the financing of individual households (over-indebted) countries. Now the question is: In what area of ​​the purchase of government bonds on the secondary market falls? Permitted or prohibited? In addition, the EU Treaty includes a ban on the ECB to finance individual states. By contrast, the ECB had failed, the plaintiffs say.

For the Federal Constitutional Court in its decision of talk February 7, 2014 weighty reasons that the ECB exceeds its mandate of monetary policy to the OMT program. One indication is that the ECB would buy only government bonds of individual Member States. Monetary policy concerns typically but all states equally. They also see the following danger: utilities such as the European rescue fund ESM were an amount limited, also the parliaments have here control functions. With a purchase of government bonds by the ECB, this independent control mechanisms could be circumvented. Second complaint: The OMT program infringes the principle of the EU treaties, that the ECB should not operate government financing. However, Karlsruhe also leaves a “back door” open. The decision of the ECB is perhaps then not objectionable if you would move certain limits. As an example, called the court: the exclusion of a haircut, a purchase of government bonds only in limited amounts, and that there was no intervention in the market price of the government bonds