Germany's constitutional judges set limits on the ECB's bond purchases. But how should the judgment be implemented? The central bank itself emphasizes its obligations as a European institution.
Frankfurt / Main (dpa) - ECB President Christine Lagarde is convinced that the Bundesbank must continue to participate in bond purchases despite the restrictive Karlsruhe ruling.
"Under the agreement, all national central banks will have to participate fully in the decisions and implementation of the euro area monetary policy," Lagarde said in an interview published online with four European newspapers on Monday evening, including the "Handelsblatt".
"Every national central bank in the eurozone is independent and cannot take instructions from governments. This is laid down in the treaties," said Lagarde. With just over 26 percent, the Deutsche Bundesbank is the largest shareholder in the common central bank for the euro area with its 19 member states.
On May 5, the Federal Constitutional Court criticized the billion-dollar government bond purchases by the European Central Bank (ECB) as part of the so-called PSPP program (Az. 2 BvR 859/15 and others). According to the judgment, the Bundesbank may only participate in these purchases in the future if the Governing Council clearly explains their proportionality.
The German Supreme Court gave the federal government three months to persuade the ECB to review it. For the first time, Karlsruhe opposed a judgment of the European Court of Justice (ECJ).
"My conviction is clear," said Lagarde in the interview. "The ECB has been given a mandate by the EU Member States to draw up and ratify the treaty. The ECB is subject to the case law of the Court of Justice of the European Union. We will continue to be responsible to the European Parliament and explain our decisions to European citizens."
Frankfurt European lawyer Christoph Schalast expects that the EU institutions will legally defend themselves against the Karlsruhe judge's decision. "I am sure that we will see a counterclaim from Brussels against this judgment," said Schalast in a video slot with journalists on Tuesday. At the same time, he expects numerous other lawsuits against decisions of the ECB - also against the additional bond purchase program of the central bank expressly excluded by the Federal Constitutional Court in the corona crisis. "Lawsuits will be filed against every measure taken by the ECB. The judgment is an invitation to do so," said Schalast.
The main goal of the ECB is a balanced price level. In the medium term, the monetary authorities are aiming for an inflation rate of just under 2.0 percent. The large amount of money that comes in through bond purchases usually fuels inflation.
BVerfG judgment of May 5, 2020
ECJ judgment of December 11, 2018
ECB buying programs
Legal framework of the ECB