Saturday 16 December 2017

Schaeuble defends bond plan in German court

Wolfgang Schaeuble.
Wolfgang Schaeuble.

Annika Breidthardt

Germany's finance minister defended the European Central Bank's bond-buying scheme against charges it violates German law and questioned whether the country's top court had the power to rule on a scheme many credit with saving the eurozone.

The comments by Wolfgang Schaeuble and a separate statement by the president of Germany's Constitutional Court at the start of a two-day hearing on the ECB's bond plan raised the prospect of the case being referred to the European Court of Justice (ECJ) in Luxembourg.

More than 35,000 Germans filed complaints against the ECB's programme to buy up the debt of stricken southern eurozone members, claiming it violates the central bank's mandate for price stability and amounts to illegal back-door financing of governments.

But although the ECB is based in Frankfurt, it is bound by European Union law, raising questions about whether the Karlsruhe-based court has jurisdiction over it.

ECB president Mario Draghi, who unveiled the programme dubbed Outright Monetary Transactions (OMT) last year as fears of a catastrophic euro breakup flared, has called it "probably the most successful monetary policy measure undertaken in recent time".

Legal experts believe the ECJ is much more likely to give a green light to the OMT, though the German court could attach recommendations if it did refer the case.

Making the case for the German government, Schaeuble said at the hearing: "I find it hard to imagine that German courts would decide directly on the legality of the ECB's actions".

If they did so, he said, there was a risk that courts in all 17 euro zone member states would try to weigh in, giving the ECB contradictory legal orders.

"The German government sees no signs that the measures taken by the ECB so far violate its mandate," Schaeuble said.

The case continues today. Judges are not expected to reach a final ruling until after German parliamentary elections in September. The crisis has subsided significantly since Draghi promised to do whatever it takes to save the euro last July.

Irish Independent

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