Saturday 23 September 2017

German coalition member urges legal action against ECB over bond purchases

A member of Chancellor Angela Merkel's junior coalition partner said the German government should consider the "unusual step" of taking legal action against the European Central Bank over bond purchases.

Joerg-Uwe Hahn, a regional leader of the pro-business Free Democrats (FDP), is an outsider in his party and often critical of its leaders but his comments highlight growing German unease about the costs of fighting the euro zone debt crisis.

"The European treaties allow member states to sue the ECB," Hahn, a member of the ruling centre-right coalition in the state of Hesse, told Monday's edition of Die Welt newspaper, adding that Berlin should consider opening a lawsuit against the bank via the European Court of Justice.

"It's time to open the toolbox of the (EU's) Lisbon Treaty and see how one can ensure that the ECB is brought into line to focus on its original task: monetary stability," he said, acknowledging that this would be "an unusual step".

Hahn's comments were in response to a pledge last week by ECB President Mario Draghi that the ECB was ready to fight to save the euro. "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro," Draghi said.

Financial markets have interpreted this as meaning the ECB is ready to resume buying the debt of troubled euro zone countries on the secondary market to help bring down high yields on Spanish and Italian government bonds.

Asked about Hahn's suggestion, a senior member of Merkel's Christian Democrats, Norbert Barthle, responded cautiously, telling Die Welt: "If Mario Draghi says the measures are legally covered by the mandate, then I believe him for now."

Merkel has also vowed to do whatever is necessary to save the euro in statements issued over the past few days following separate telephone conversations with French President Francois Hollande and with Italian Prime Minister Mario Monti.

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