Arab Today, arab today germanys top court to examine if ecbs bondbuying is legal
Last Updated : GMT 00:47:20
Arab Today, arab today
Arab Today, arab today

Germany's top court to examine if ECB's bond-buying is legal

Arab Today, arab today

Arab Today, arab today Germany's top court to examine if ECB's bond-buying is legal

The OMTor Outright Monetary Transactions programme
Frankfurt - AFP

Germany's constitutional court will from Tuesday examine whether the ECB overstepped its mandate through a scheme to potentially buy unlimited amounts of government debt, as the bank prepared to ramp up its bond purchase programme.

The OMT -- or Outright Monetary Transactions -- programme was unveiled in 2012, at the height of the eurozone sovereign debt crisis, as the ECB's weapon to warn off investors from speculating on government bonds.

The programme was never implemented, and has since been superceded by a far bigger bond purchasing programme known as QE, although that is aimed now at kickstarting inflation rather than warding off speculation.

The German top court's ruling would focus on the now likely defunct measure but could have a bearing over the ECB's ongoing 1.1 trillion euro bond buying programme until March 2017.

For critics, such measures are effectively a way of printing money to pay off a government's debt.

Some 37,000 eurosceptics initially took their case against the OMT to Germany's highest court in 2014.

The constitutional court then partially agreed with their concerns, ruling that there are "important reasons to suggest that it goes beyond the ECB's monetary policy mandate and infringes on the powers of the member states and contravenes the ban on monetary deficit financing".

But it passed the case on to the European Court of Justice in Luxembourg before issuing its final ruling.

The ECJ however last June swiped aside the German court's misgivings, saying the scheme was compatible with EU law.

The court in Karlsruhe therefore now has to issue its final decision on the case, with a verdict not expected before a few months.

- 'Compromise?' -
Debt-wary Germany is especially sceptical about such bond-purchasing programmes, and the head of the country's central bank Jens Weidmann had voted against both OMT and QE.

At the ECB's regular monetary policy meetings, Weidmann has also played a dissuading role when bank chief Mario Draghi made any suggestions of further ramping up the bond purchasing programme.

Commerzbank analyst Michael Schubert believes that the German court "will probably not change its previous ruling, even after" the ECJ's decision.

Rather, German judges "will likely try to find a compromise", he predicted.

This could see the court accept the European court's conclusions while rejecting its reasoning, or simply reserving the right to reexamine the situation in case of new developments, he said.

A group of renowned German economists including Clemens Fuest, who heads the Ifo institute, had warned that if the German court agrees with the ECJ, it would open the floodgates for other unconventional measures.

"From the moment that the ECB carries out an intervention in the crisis, we risk sending (the eurozone) in the wrong direction," they added, pointing out that debt-laden countries would lose the incentive to pursue meaningful reforms of their economies, and could simply wait for the ECB to rescue them.

At the ECB's first monetary policy setting meet this year, bank chief Mario Draghi hinted the bank could boost stimulus measures and further slash rates to give stubbornly low inflation a nudge.

 

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 to examine if ecbs bondbuying is legal Arab Today, arab today germanys top court to examine if ecbs bondbuying is legal

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today Sheds light on major steps in 12-year career

GMT 06:07 2017 Monday ,27 February

Sheds light on major steps in 12-year career
Arab Today, arab today Dozens dead in US-led Syria strikes

GMT 08:35 2017 Thursday ,23 March

Dozens dead in US-led Syria strikes
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today MP submits a petition to dismiss university head

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Renault Trezor wins design award

GMT 11:56 2017 Tuesday ,21 March

Renault Trezor wins design award
Arab Today, arab today Merna Waleed praises her work with Soad Hosni

GMT 07:03 2017 Wednesday ,22 March

Merna Waleed praises her work with Soad Hosni
Arab Today, arab today 2017 already marked

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 07:12 2017 Tuesday ,21 March

Donia Abdel Aziz participates in "Game of Silence"

GMT 22:00 2017 Thursday ,23 March

Number of unwedded girls amounts to 2.5m

GMT 10:34 2017 Tuesday ,21 March

Mexico threatens to ditch US corn imports

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"

GMT 07:38 2017 Friday ,24 March

Pass health bill Friday or he'll move on

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
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