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Court rules in favor of ECB bond-buying scheme

May 18, 2021

Germany's Constitutional Court has ruled that the European Central Bank's purchase of government bonds was properly implemented.

https://p.dw.com/p/3tXZl
The eurozone's central bank launched the bond buying program in 2015
The eurozone's central bank launched the bond-buying program in 2015 in response to the sovereign debt crisisImage: Imago-Images/STPP

The Constitutional Court in the southwestern city of Karlsruhe on Tuesday ruled that the buying of bonds by the European Central Bank (ECB) was acceptable.

The trillion-dollar government bond purchase program launched by the eurozone's central bank in 2015 — backed by member states such as Germany — has long been a source of contention.

What was the court's decision?

The court ruled that the government had not failed in applying pressure to ensure that measures taken by the ECB were proportionate.

Under a previous ruling, Berlin was required to take appropriate measures to ensure the ECB had not overstepped its purview. 

However, the Constitutional Court said the complaints were unfounded because the government and ECB had already addressed previous concerns.

"It is not apparent that they have exceeded their scope for assessment, evaluation and creative leeway," the Karlsruhe court said on Tuesday.

The bonds program was launched in 2015 to boost the EU's economy, as the continent struggled to recover from the sovereign debt crisis.

Plaintiffs included Bavarian lawyer and conservative politician Peter Gauweiler, and the former leader of the far-right Alternative for Germany (AfD), Bernd Lucke.

Familiar questions for judges

The issue of whether or not the ECB's multibillion-euro crisis-fighting measures are legal comes up for regular consideration by the 16 judges at the court.

In a decision last May, the court threatened to block Germany's central Bundesbank from taking part in the stimulus plan unless the ECB could show within three months that its government debt purchases were not "disproportionate."

After the ECB passed documents on to Germany's parliament, lawmakers in Berlin last July passed a resolution saying they were satisfied.

The court said the legal challenges were "unfounded because the government and the Bundestag have dealt with the content of the decisions of the ECB Governing Council taken after the ruling of May 5, 2020."

It added that the government and Bundestag's actions in implementing its ruling were it "found to be sufficient."

rc/nm (dpa, Reuters, AFP)