The public debt purchase program launched by the European Central Bank (ECB) in 2015 partially violates the German constitutional framework and, if in the next three months the Governing Council of the ECB does not justify the proportionality of said program, the Bundesbank will stop participate in it.

That was the verdict on Tuesday of the German Constitutional Court, an unexpected pronouncement that not only limits the capacity of the German Parliament to act, but also corrects for the first time the decision taken in December 2018 by the European Court of Justice.

The magistrates, in their argumentation, question the principle of proportionality of the public debt purchase program launched by Mario Draghi and blame the Government and the Bundestag for not having examined the decisions of the ECB as required by the German Magna Carta in all relevant decisions. The sentence had seven favorable votes and one against.

"The Court has found for the first time in its history that the actions and decisions of the European institutions were not covered by the European system of powers, President Andreas Voßkuhle said when the judgment was pronounced. Therefore, they could not be effective in Germany.

And he added that "due to their responsibility for integration, the Federal Government and the German Bundestag are obliged to oppose the previous management of the PSPP (the purchase program of the ECB)."

Therefore, the Bundesbank is prohibited from participating in the implementation of the ECB purchase program after a transition period of not more than three months, unless the Governing Council of the ECB clearly explains in a new decision that the program is proportional, says the ruling. This has serious consequences for the European Central Bank's ability to act.

The Bundesbank, as the largest shareholder of the ECB , represents a significant part of the volume of purchases of government bonds. These have now reached a total volume of around 2.2 trillion euros.

The German TC's statement responds to the complaint filed by a group of businessmen and academics, who considered that the ECB had exceeded its mandate and with it the Bundesbank.

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  • European central bank
  • Germany
  • economy

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