ECB government bond purchases partially unconstitutional

The Federal Constitutional Court has criticized the European Central Bank's government bond purchases as being partially illegal.

• The Federal Constitutional Court has ruled on government bond purchases by the European Central Bank .
• The ECB's government bond purchases were partially unconstitutional.
• The ECB's current Corona * aid was not the subject of the decision.

Karlsruhe - The Federal Constitutional Court has largely granted several lawsuits against the billion-dollar government bond purchases by the European Central Bank (ECB) since 2015. The decisions of the central bank were made contrary to competency, the Karlsruhe judges decided in a judgment announced on Tuesday. The Federal Government and the Bundestag had violated fundamental rights by doing nothing. However, the Senate did not find any prohibited state funding. The ECB's current Corona aid is not the subject of the decision. (Az. 2 BvR 859/15 and others) 

The court found for the first time in its history that the actions and decisions of European institutions were obviously not covered by the European system of powers, said President Andreas Voßkuhle when the verdict was pronounced. They could therefore not be effective in Germany . 

Karlsruhe: Federal Constitutional Court decides on ECB bond purchases

Between March 2015 and the end of 2018, the central bank had invested around 2.6 trillion euros in government bonds and other securities - most of it through the PSPP (Public Sector Purchase Program) program to which the judgment relates. As of November 1, 2019, the controversial purchases were reissued, initially in a comparatively small amount of EUR 20 billion a month. 

#BVerfG Decisions of the ECB on the government bond purchase program contrary to the competence https://t.co/WM8RM4uIyV

A lot of money goes into circulation through bond purchases , which usually fuels inflation . The ECB is aiming for an inflation rate of just under 2.0 percent in the medium term. Stagnating or falling prices can entice consumers and companies to postpone investments. This can slow the economy down. 

ECB judgment: Federal Constitutional Court against European Court of Justice

With their judgment, the constitutional judges oppose the European Court of Justice (ECJ). This had given the purchase program his blessing from Karlsruhe in December 2018 against massive concerns. This preliminary decision from Luxembourg was "absolutely no longer understandable", it said in the decision of the German constitutional judge. 

In order to cushion the economic consequences of the corona crisis, the ECB has once again significantly expanded its bond purchases. Current purchase programs were increased by 120 billion euros by the end of 2020. This money is to flow primarily into corporate papers. An extra crisis program with 750 billion euros should run at least until the end of the year - and be expanded "without restriction" if necessary. These programs were not part of the process. 

The reason for the verdict were four constitutional complaints from 2015 and 2016. The former CSU deputy party leader Peter Gauweiler, ex-AfD politicians Bernd Lucke and Hans-Olaf Henkel were among the complaints. Another group of plaintiffs was represented by the Berlin finance scientist Markus Kerber.

dpa / afp / sbh

* fr.de is part of the nationwide Ippen editorial network