LUXEMBOURG (Reuters) - The European Central Bank won a landmark court case on Tuesday as the European Union's top judges backed its multi-trillion-euro purchases of government bonds after a complaint by a group of German eurosceptics.
The ruling defuses a legal battle that has dogged the ECB's stimulus policy for years and sets a key precedent for future decisions. The matter will now be sent back to Germany's constitutional court for a final verdict.
The Court of Justice of the European Union rejected arguments that the ECB was effectively bankrolling governments with its 2.1 trillion-euro (1.88 trillion-pound) Public-Sector Purchase Programme (PSPP), which is expected to stop at the end of this month.
"The Court... finds that the PSPP programme does not infringe the prohibition of monetary financing," the judges said in a press release.
Their ruling had been requested by Germany's constitutional court in Karlsruhe, where complainants, including Bernd Lucke, a eurosceptic member of the European Parliament, had lodged their case.
The ECB's quantitative easing programme, the key plank of a policy that has revived inflation and growth in the euro zone, has often been criticised in Germany for inflating bond prices and endangering taxpayer money.
The central bank was expected to announce this week that it will stop adding to its 2.6 trillion euros of bonds at the end of the year, although it would reinvest proceeds from maturing debt for a long time.
(Reporting by Michele Sinner, writing by Francesco Canepa in Frankfurt; editing by Matthew Mpoke Bigg, Larry King)