Arab Today, arab today germanys top court backs ecb crisisfighting tool
Last Updated : GMT 04:31:13
Arab Today, arab today
Arab Today, arab today

Germany's top court backs ECB crisis-fighting tool

Arab Today, arab today

Arab Today, arab today Germany's top court backs ECB crisis-fighting tool

The European Central Bank (ECB) headquarters
Karlsruhe - AFP

Germany's constitutional court Tuesday quashed a eurosceptic lawsuit against one of the European Central Bank's key crisis-fighting tools, as the ECB steeled itself for market turmoil from a possible Brexit.

Throwing out a long-running suit by a group of politicians and academics, Germany's highest court ruled that the ECB's 2012 bond-buying plan called Outright Monetary Transactions (OMT) were legal under the country's constitution.

While the OMT scheme has never actually been used, it was part of ECB President Mario Draghi's landmark promise to do "whatever it takes" to save the battered euro at the height of the crisis in 2012.

That vow, backed by the announcement of the OMT programme, helped reduce borrowing costs for the most debt-hit countries, calmed markets and brought the eurozone back from the brink.

The promise of OMT was that the ECB could, if necessary, buy up unlimited amounts of government bonds from debt-stricken countries that had pledged reforms such as Italy, Spain and Portugal.

Critics charged that the ECB is essentially printing money and lavishing it on states, leaving taxpayers with the risk of one day having to foot the bill.

The ECB has since launched a range of other policy measures aimed at kick-starting the eurozone's moribund economy and driving inflation back up to levels more compatible with healthy growth.

- Within ECB's mandate -

Few observers had expected the Constitutional Court to torpedo the ECB's programme.

In January 2014, it had voiced concerns about OMT but then kicked the case up to the European Court of Justice (ECJ) in Luxembourg.

The EU's highest court has since essentially backed OMT, arguing that while the ECB's chief purpose is price stability, it may also support EU economic policy goals.

Reading out the Constitutional Court's ruling on Tuesday, judge Andreas Vosskuehle found that the OMT did not overstep the ECB's mandate.

ECB chief Draghi, speaking at a hearing of the EU's Committee on Economic and Monetary Affairs in Brussels, said the central bank "took note" of the findings.

The EU Commission was more forthcoming, saying it "welcomed" the ruling.

The head of the DIW think tank, Marcel Fratzscher, hailed it as "intelligent" and "wise".

But others were not so pleased. The head of the influential Ifo think tank, Clemens Fuest, accused the judges of "doing a U-turn" and kowtowing to the ECJ.

Berenberg Bank economist Holger Schmieding said the ruling "makes it even more likely that the German court will also reject" pending lawsuits against the ECB's other policy measures, including against the ECB decision to broaden bond purchases from only sovereign to corporate bonds.

That move is part of the ECB's massive quantitative easing, or QE, stimulus programme that aims to boost inflation and growth in the 19-member currency bloc.

The ECB has also slashed interest rates to zero, further raising hackles in Germany because low rates hurt savers, and pumped more than one trillion euros ($1.1 trillion) into the financial system.

- Cheap cash, Brexit fears -

The Constitutional Court ruling came in a very busy week for the ECB, which is scheduled to launch the next round of ultra-cheap loans for banks, who are meant to pass the credit on to the real economy, meaning households and business.

The scheme is known as targeted longer-term refinancing operations, or TLTRO.

And on Thursday, all eyes will be on Britain's referendum on whether to stay in the EU or leave.

Both the euro and pound have dipped in the lead-up to the vote, as analysts fear a Brexit would spark market panic.

On the bond market, German 10-year bonds saw their yields drop below zero last week, a sign of a run on safe investments.

Financier George Soros warned of a Black Friday plunge in sterling if Britain votes to quit the EU as new polls showed a razor-tight race 48 hours ahead of the referendum.

Speaking in Brussels, ECB chief Draghi said that it was very difficult to predict the possible economic and financial repurcussions of the outcome of the vote, but that the bank was prepared for all eventualities.

"We're trying to be ready to cope with all possible contingencies," the ECB chief continued.

"We've done all preparation that is necessary now."

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today germanys top court backs ecb crisisfighting tool Arab Today, arab today germanys top court backs ecb crisisfighting tool

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today germanys top court backs ecb crisisfighting tool Arab Today, arab today germanys top court backs ecb crisisfighting tool

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Taxi! Transport gets an overhaul

GMT 12:09 2017 Sunday ,24 September

Taxi! Transport gets an overhaul
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Turkey warns of 'security' steps

GMT 12:17 2017 Sunday ,24 September

Turkey warns of 'security' steps
Arab Today, arab today North Korea 'more opaque'

GMT 10:50 2017 Sunday ,24 September

North Korea 'more opaque'
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today 'Lady Beast' fights for girl gamers

GMT 10:27 2017 Sunday ,24 September

'Lady Beast' fights for girl gamers
Arab Today, arab today Psychologists help Mexico deal

GMT 05:05 2017 Sunday ,24 September

Psychologists help Mexico deal
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Third generation adds more power

GMT 13:40 2017 Sunday ,24 September

Third generation adds more power
Arab Today, arab today Carmakers face billions in European

GMT 12:37 2017 Saturday ,23 September

Carmakers face billions in European
Arab Today, arab today Lebleba is preoccupied in filming 'Back Street'

GMT 08:56 2017 Thursday ,21 September

Lebleba is preoccupied in filming 'Back Street'
Arab Today, arab today Big Western brands polluting oceans

GMT 20:10 2017 Saturday ,23 September

Big Western brands polluting oceans

GMT 08:59 2017 Wednesday ,20 September

Youssra prepares for launching her program

GMT 10:16 2017 Friday ,22 September

All eyes on May as she prepares

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 12:01 2017 Wednesday ,20 September

Puerto Rico, Virgin Islands brace

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 18:11 2017 Saturday ,23 September

Doctor provides advices to families

GMT 13:36 2017 Saturday ,23 September

unveils Joon - the 'millenials' airline

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:46 2017 Thursday ,21 September

Google likely to buy stake in Taiwan smartphone maker HTC

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday