German top court throws out challenge to ECB bond-buying

[BERLIN] Germany's top court on Tuesday slapped down renewed attempts at reopening a challenge against the ECB's eurozone-wide bond-buying programme, deeming the legal cases unfounded.

In a stunning decision last May, Germany's Federal Constitutional Court (FCC) had threatened to block the Bundesbank, the central bank, from taking part in the stimulus plan unless the European Central Bank (ECB) could show within three months that its government debt purchases are not "disproportionate".

After receiving documentary evidence from the ECB, Germany's Parliament last July passed a resolution concluding that it was satisfied that the bank had adequately shown it did not overstep the mark.

However, two new challenges were filed at the court over the case, arguing that Berlin did not take sufficient action to satisfy the earlier court ruling.

On Tuesday, the court came down on the side of the German government and Parliament, making public for the first time its assessment that the two institutions have complied with its earlier decision.

The legal challenges are "unfounded because the government and the Bundestag have dealt with the content of the decisions of the ECB Governing Council taken after the ruling of May 5, 2020," said the court.

It added that it "found to be sufficient" the government and Bundestag's actions in implementing its ruling.

The ECB's US$3 trillion Asset Purchase Programme is a key stimulus tool deployed by the bank since 2015.

The purchases of government debt on the secondary market are designed to drive cash out of safe-haven bonds and into riskier investments more favourable to growth.

AFP