Germany’s Constitutional Court has said it thinks the European Central Bank’s bond-buying plan exceeds the ECB’s mandate and violates a ban on it funding governments.
But the court is not going to block it and instead is referring the case to the European Court of Justice.
In September 2012 the ECB promised potentially unlimited purchases of eurozone government bonds.
It has never done that, but the move was widely credited with stabilising the euro at the height of the sovereign debt crisis.
It calmed fears about the eurozone falling apart and backed up ECB President Mario Draghi’s vow to do “whatever it takes” to save the euro.
Germany’s Bundesbank is opposed to the plan which is why the country’s Constitutional Court was asked to consider whether it conforms with German law.
A decision from the European Court of Justice could take up to two years and legal experts said the ECJ is more likely to rule in the ECB’s favour.
“Practically speaking, the Court of Justice is not an independent organisation but is pre-disposed to interpret legal questions in the interest of the European Union,” University of London European Law expert Gunnar Beck said.
“The court of justice doesn’t take account of national sensibilities… there is no doubt of the outcome now.”
The ECB said it took note of the German court’s announcement and stood by its measure, saying in a statement: “The ECB reiterates that the Outright Monetary Transactions programme falls within its mandate”.
ECB board member Yves Mersch, who is in charge of legal services at the bank, said the court’s decision did not affect the plan’s credibility. “We are very confident,” he said.
In Brussels, the European Commission welcomed the German court’s decision to refer the case to the ECJ. The EU’s executive has long supported the ECB’s game-changing initiative.
Others took a different view.
German conservative lawmaker Peter Gauweiler, one of the most prominent plaintiffs in the case, said the court decision was an “interim success in our fight against infringements of our constitutional democracy via supranational institutions”.