German finmin Schaeuble does not agree with German court on European Central Bank

Remigio Civitarese
Agosto 16, 2017

"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.

"I don't share this opinion", Schaeuble said during a business dinner hosted by the Handelsblatt business newspaper.

He said that the European Central Bank was exhausting the tools at its disposal to "fulfill its hellishly hard task of devising a monetary policy for many different countries".

Those making the challenge have argued that the scheme constitutes illegal monetary financing of some eurozone countries and say the German Bundesbank, the biggest buyers of bonds in the program, should therefore not participate.

The decision to pass the issue over to the ECJ means any final ruling will come either after or near the end of QE, which started in 2015 and is expected to be wound down next year.

At present the PSPP scheme allows the ECB buy up securities in supranational organisations such as the EU and European Stability Mechanism (ESM) bailout fund, but also euro area institutions such as Germany's public development bank KfW and Ireland's Housing Finance Agency.

Sensing another round looming in its long-running battle with Karlsruhe on QE, the European Central Bank said it believed the programme was "fully within our mandate" but said it was the ECJ's job to decide. The European court has already backed the ECB's more contentious, and still unused, emergency bond-purchase scheme known as outright monetary transactions, or OMT, with only relatively minor limitations. Specifically, the court is questioning the bank's €2.3 trillion asset purchase programme.

That forced the Karlsruhe judges to back down on previous concerns they aired, in cases brought by the AfD and other complainants.

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