The European Central Bank on Tuesday stood firm after Germany’s top court questioned its massive bond-buying stimulus scheme, vowing to do «everything necessary»…
The European Central Bank on Tuesday stood firm after Germany’s top court questioned its massive bond-buying stimulus scheme, vowing to do «everything necessary» to fulfil its mandate of ensuring price stability.
In a shock ruling, Germany’s Constitutional Court gave the ECB three months to clarify key elements of its support to the eurozone, but stopped short of overturning its crisis-era «quantitative easing» (QE) bond-buying scheme altogether.
Germany’s Bundesbank central bank will however be barred from participating in QE after the deadline unless the ECB can show its government debt purchases are not «disproportionate», judges in Karlsruhe said.
The court also raised an unprecedented challenge to the Court of Justice of the European Union (CJEU), labelling its earlier ruling rubber-stamping the QE scheme «not comprehensible» and declaring it not legally binding.
The ECB said it «takes note» of the Karlsruhe judgement, after its 25-member governing council held a telephone conference to discuss its response.
«The Governing Council remains fully committed to doing everything necessary within its mandate» to maintain price stability in the eurozone and ensure its monetary policy action filters through to the real economy, it said.
Crucially, presiding judge Andreas Vosskuhle stressed that the ECB’s new 750 billion euro ($813 billion) «Pandemic Emergency Purchase Programme» (PEPP) launched to fight the impact of the coronavirus was not directly affected by the ruling.
