justice puts the German central bank face to face with its responsibilities

(Agence Ecofin) – It is now up to the German Central Bank to say whether it can continue to participate in the programs of the European Central Bank (ECB). So decided the Supreme Court of the country for which the ECB went beyond its mission by massively buying back public debt.

In Germany, justice has transferred to the Bundesbank, the country’s central bank, the responsibility for deciding whether the country should continue to support the European Central Bank (ECB) asset buy-back program.

Peter Huber, one of the conservative judges of the Constitutional Court, said in an interview with Frankfurter General newspaper, a large circulation newspaper in the city of Frankfurt, that justice is no longer involved in the process.

“The Bundesbank is bound by our decision, but it must determine on its own responsibility whether the arguments raised by the European Central Bank comply with our requirements. The Federal Constitutional Court is no longer involved ”, can we read in the interview with Mr. Huber. He adds that he is not satisfied with the reasoning presented by the ECB.

In a historic decision taken in early May 2020, the highest court in Germany instructed the ECB to explain before August, and in a manner “Understandable and detailed”, how the positive effects of its public debt buyout program outweigh its disadvantages, and especially that it has not exceeded its missions.

The ECB is regularly accused in Germany of not remaining in strict compliance with its prerogatives, and of engaging in initiatives which consist in helping the states of the euro zone, in particular those located in the south of the region. For the German Supreme Court, by massively buying up public debt, the ECB intervenes on the ground “Economic policy”, well beyond its monetary competence of guaranteeing a certain level of inflation.

Idriss Linen

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