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ECB crisis policies ends up again in Karlsruhe

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ECB crisis policies ends up again in Karlsruhe

The Anleihekaufprogramm of the European Central Bank is to an infinite Justizgeschichte. It wandered from Karlsruhe to Luxembourg and is now back at the Federal constitutional court aufgedröselt.

The plaintiffs, it was a matter of principle. The CSU politician Peter Gauweiler, the former Federal Minister of justice Herta Däuble-Gmelin (SPD), parliamentary group of the Left and the club “More democracy” submitted a constitutional complaint against the so-called OMT program, which never has been used. OMT stands for “Outright Monetary Transactions”. This is a very technical-sounding program, the plaintiffs and the 12,000 people the complaint connected, as highly dangerous for the monetary Union.

ECB chief Mario Draghi wants the Euro with all means to defend

It was the fulfillment of the promise of ECB chief Mario Draghi in late July 2012 gave, as he zusicherte to do everything to save the Euro. At that time, the single currency, a target of hedge funds. With the spontaneously formulated, set down of the top Central bankers of the Eurozone, the markets abruptly. But the one sentence was enough to investors. They wanted something Concrete.

In September 2012, met with then Council of the ECB, with the OMT program, a far-reaching decision: The Central Bank will, if necessary unlimited purchases of the bonds of the damp Euro-countries to buy in the monetary Union to keep. To the expected adversary, especially from Germany, to calm, were conditions of the program conditional: The ECB will act only if the affected country under the ESM slips and, consequently, strict Reformvorgaben must meet. And the governing Council may purchase, at any time, if the goals are reached, or the Land reforms as agreed to implement.

Obvious Violations

Thus, violations of the ECB against two prohibitions, critics say. Because according to the EU Treaty may, the Central Bank is no economic policy. By reforms in the crisis countries monitored, shuffle them into their economic policies, so the Argument. The ECB is also funding the national budgets of the Euro countries is prohibited. If you papers of distressed countries copyrights, lowers interest rates and reduces the households. Is there a different name for this than state funding?

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Similar is the opinion of the Bundesbank, the constitutional court judges have ordered. Jens Weidmann, President of the German Central Bank, had, by the way, the only one in the ECB governing Council refused, the OMT program abzusegnen.

The Federal constitutional court gave the Central Bank and the plaintiffs right, shied away from but in front of a clear judgment. Because a verdict of the German constitutional court judges against the Central policy of the ECB would have turbulence on the financial markets triggered by the Eurozone crash.

Persilschein for Draghi

So chose the judges the less risky way and entered the case in February 2014 at the European court of justice (ECJ). This is explained in the summer of 2015, as expected, the OMT-program for legal. Also in the past left the Luxembourg judges have no opportunity unused to the competence of the EU institutions extend.

The ECJ started to be in turn runs to the Anleihekaufprogramm: The purchases would have to be well justified and proportionate. This is so vague and windelweich formulated that the judgment as a Persilschein for the Draghi effect.

Now lands the Ball again before the Federal constitutional court. As of Tuesday (16.02.2016) is also negotiated. The judges from Karlsruhe, Germany, at the time, extra stresses, the final decision to retain. Would a u-turn out and the judgment at the European level, they would lose credibility. Just as unlikely, that the judges, without regard to losses, a judgment against the OMT program cases. It would need to be something in between.

Economist Clemens Fuest is one of the critics of the ECB policy

A Yes and no is expected

So guess well-known Economists such as the future Ifo chief Clemens Fuest and the economy Lars Feld, the chief judges, the ECJ ruling only in the results to follow, but not in the grounds. So you would be the judicial review of future ECB steps is not entirely out of Hand. With a judgment is only in a few months.

Probably is the controversial program, anyway, never sees the daylight. To the German concerns to dispel, has Mario Draghi in March 2015, an attenuated Anleihekaufprogramm started with the German Bundesbank President Weidmann can live with. So have seen the plaintiff already won.

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