Germany. The German Constitutional Court upheld on Tuesday one of the programs of massive purchase of the European Central Bank (ECB) debt, after three years of a lawsuit filed by by private judgment.
the mechanism, called OMT (Outright monetary Transactions) and allows the ECB to buy government bonds in large quantities to keep interest rates skyrocket, it is within the prerogatives of the monetary institution, considered the court , based in Karlsruhe.
the program was approved in September 2012 during the crisis of the debt. Although so far never ever launched, the announcement of its creation helped to calm the hike.
The judges put however some conditions to a future activation program and expressed “reservations” about the democratic legitimacy of the ECB.
Following the judgment, the European Commission said in a statement that “fully supports” the action of the institution in Frankfurt .
the OMT was denounced by a German eurosceptic deputy, a group of university professors and several thousand individuals who believe that the ECB violates its mandate which specifically prohibits funding to States .
critics of the ECB, including several politicians, do not want Germany to be forced to finance the countries of the euro zone with large budget deficits and consider their policy low rates is a “spoliation” for savers.
at first the Constitutional seemed to agree with the complainants but after consultation with the court of the Union European Luxembourg, the judges decided to follow their opinion and validate the mechanism. In practice, the ruling means that the Bundesbank, the German central bank could launch the OMT program. Purchases ECB debt are made through the central banks of the countries of the euro zone
-. Crucial week – The decision on Tuesday is important because since March 2015 the ECB is buying by central banks 80 000 000 million monthly debt, much more than expected in the OMT.
“German judges have taken a turn, have not dared “to challenge European justice lamented the president of the institute of economic forecasting Ifo, Clemens Fuest, very critical of the ECB.
Al Marcel contrary Fratzscher, president of the institute DIW, welcomed a “smart” decision and “wise”. “It was time to end the conflicts in Germany with the ECB,” he said.
The court decision Karlsuhe was the first date of a crucial week for the ECB , which on Wednesday will launch a program of large loans to European banks and Thursday will continue with a lot of attention to the outcome of the referendum in the UK on their stay in the EU.
the loans are part of a program to boost prices in the euro area, which also includes keeping interest rates at historically low levels and massive debt purchase.
According to analysts of UniCredit, the possibility of a Brexit lead to European banks to borrow “precautionary” the ECB to address possible turbulence following the referendum.
the ECB has already announced that it is “prepared for any eventuality” in case of turmoil in the markets or the banking sector.
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