Showdown in Karlsruhe? Probably for the last time are opponents and supporters of the controversial emergency program of the European Central Bank called OMT this Tuesday clashed in oral proceedings before the Federal Constitutional Court. Again they fought over the question of whether the powerful central bank exceeded its competence and violated law when it decided at the height of the euro crisis, if necessary indefinitely to buy bonds of suffering from financial difficulties Member countries of the monetary union.
This point was one of the main points at issue before the highest German court. Governing Director Yves Mersch and Financial Secretary Jens Spahn highlighted the program limitations. Mersch said that the purchase volume is limited because the central bank purchases of only debt securities in the short-term segment and this amount inevitably finally was natural. Spahn project aimed that the OMT program an auxiliary and reform program of the euro bailout fund ESM was needed about the decide the Bundestag.
The plaintiffs, which include, for example, the former CSU MP Peter Gauweiler include, presented exactly these limitations into question and expressed the view that the program basically bein hold unlimited purchases. The German Bundesbank President Jens Weidmann, who testified again in this process, explained his reservations remained. He pushes himself particularly because the risks arising from potential defaults of individual euro countries would communitarized with OMT purchases.
“The risks are divided according to the ECB’s capital quotas to the individual national central banks and thus to taxpayers” said Weidmann. He also criticized the fact that there would be a mix of monetary and fiscal policies of the finance minister. Financial Secretary Spahn said in turn that potential losses attributable to the central banks and the Bundesbank profit represents only a very small part of the German budget.
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As surprisingly clearly felt Constitutional judge Peter Müller, the statement of the ECB’s Director Mersch:. “. a monetary union is a community of liability” that was disarmingly clarity
Mersch and Weidmann told both, they thought it is currently unlikely that the program could actually be activated. Weidmann also stressed that even the announcement of the program have a strong effect on the behavior of financial market participants. This is also a key point of criticism of the applicant
The Berlin teaching economist Henrik Enderlein interpreted the statements of the ECB’s representative on the short message service Twitter so. “So (…) OMT was a bluff, but legal. Activation unlikely limited volume, no big deal. “
The Federal Constitutional Court had negotiated in 2013 after several constitutional complaints about the OMT announcement of the ECB. In January 2014 The Karlsruhe judges determined in a decision that the central bank had exceeded its powers, because they reach into the economic policy responsibilities of Member States. The European Court, which the judges further submitted the questions for examination, came to a different conclusion. After its judgment of June 2015, the ECB has a wide discretion and latitude can make legally compliant the OMT program.
And what decides Karlsruhe now? Your judgment should the judges announce the summer and thus actually complete this process. As it turns out, it at least let some hints of the Constitutional Court President Andreas Voßkuhle close. He said during the trial this Tuesday that the European Court has taken the concerns of his judgment much – does not speak, at least for an upcoming tough confrontation
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