Court backs anti-crisis mechanism of the ECB – The Economist

The court set certain conditions, saying that safeguards must be created to ensure that the program violates the prohibition of monetary financing of governments by a central bank.

The OMT program of bond purchases by the European Central Bank (ECB) is compatible with European law, as they ruled on Tuesday judges of the European Court of Justice.

The highest court of the European Union (EU) responded to a legal action brought by a group created in Germany consisting of 35,000 people, including politicians and academics, who had questioned the bond purchase program, called Direct Currency Transaction (OMT, for its acronym in English).

In a statement explaining the decision, the court set certain conditions, saying that safeguards must be created to ensure that the program violates the prohibition of monetary financing of governments by a central bank.

“This program of buying sovereign bonds in secondary markets does not exceed the powers of the ECB’s monetary policy and violates the prohibition of offering monetary Member States funding”, he said.

mfh