- Europe: German TC sees traits of illegality in ECB purchasing program
The President of the European Central Bank (ECB), Christine Lagarde , has warned on Thursday that she will not be intimidated by the criticism of the German Constitutional Court of the policy of buying sovereign debt in the euro zone. The ECB will continue to do "everything necessary to fulfill our mandate" of price stability in the Eurozone, explained the leader at a round table organized by the Bloomberg agency .
In this way, Lagarde has made it clear that he intends to maintain the policy of massive purchase of debt of the states and companies of the euro zone to help an economy that has entered a historical recession due to the impact of the new coronavirus.
The ECB is a "European institution, which responds to the European Parliament and is under the jurisdiction of the Court of Justice of the EU," he snapped, sending the message to the German Constitutional Court that the institution does not have to answer to any national jurisdiction.
On Tuesday, the German Constitutional Court issued an ultimatum to the ECB, asking it to justify within three months the purchases of public debt that it has made since 2015, considering that they have harmful effects on sectors of the economy, in particular on savers penalized by very low interest rates.
Otherwise, the court's judges threaten to ban the participation of the German central bank, Bundesbank , in the ECB's aid programs, which would deprive them of their effectiveness.
The problem, according to the Financial Times , is that several euro zone central bank governors are opposed to the ECB responding to the German court, citing the independence of the highest European monetary authority.
"Lagarde is going to look for a diplomatic solution that protects the independence of the ECB while satisfying the judges' demands," a source close to the central banks told AFP.
The German court urges the ECB to explain in an "understandable and detailed" way before August that the positive effects of its public debt purchase program, which has risen to 2.2 trillion euros since 2015, are greater than the disadvantages , according to Tuesday's ruling.
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