Germany’s constitutional court is challenging the European Central Bank’s effort to revive growth in the eurozone. Specifically, the court is questioning the bank’s €2.3 trillion asset purchase programme.
“Significant reasons indicate that the ECB decisions governing the asset purchase programme violate the prohibition of monetary financing and exceed the monetary policy mandate of the European Central Bank, thus encroaching upon the competences of the Member States,” the court said.
It said it would ask the European Court of Justice to review the programme, which is seen by some in Germany as a stealth bailout of indebted south European governments.
As reported by the Reuters news agency, many Germans have been irked by the scheme, commonly known as quantitative easing, arguing that Germany taxpayers have to bear the risk for others.
The ECB, however, was quick to defend it. “The extended asset purchase programme is in our opinion fully within our mandate,” it said in a statement. “That is ultimately for the European Court of Justice to assess.”
It said the €60bn per month asset buys would continue as normal.
The European court has already backed the ECB’s more contentious emergency bond purchase scheme known as Outright Monetary Transactions or OMT with only relatively minor limitations, suggesting that the challenge – lodged by several academics and politicians – may face an uphill battle.
According to Reuters, the decision to pass the issue over to the ECJ means any final ruling will come either after the bond purchases end or near the end of the scheme, which has already been running for over two years and is expected to be wound down next year.