Bond-buying programme: The ECB is in court again

another Chapter in the legal dispute around the ECB: Today, the European court of justice rules on the controversial purchase of government bonds. The answers to the issues most important to the process.

By Frank Bräutigam, ARD-right-editorial

What's the issue?

For the Federal constitutional court (BVerfG) there are many reasons in favour of the European exceeds Central Bank (ECB) with your current purchase programme of government bonds mandate that she does so more than it is allowed according to the EU treaties. Therefore, Karlsruhe has submitted the case to the European court of justice in Luxembourg (ECJ) for interpretation of EU law.

What is the dispute with the individual citizen has to do?

How the ECB's interpretation of its competences, has consequences for the citizens.

a Lot more than you might think at first glance. The ECB is independent. You don't must answer to other than governments and parliaments - to the voters. Germany has transmitted through the people's representatives in the Bundestag powers to the EU, the competence for monetary policy to the ECB. If an EU Institution would make more than it is allowed according to the EU treaties, the German citizens of the - to put it simply - not true. So it's about fundamental questions of democracy. Therefore, Karlsruhe has opened in such cases, for the individual citizen a right of action. Otherwise, it undermines their right to vote"". For the financial risks of the ECB and the German state budget is liable to the very end.

What are government bonds?

The focus of the litigation bonds. A state spends, borrows money and pays interest. Not only for crisis-ridden States government bonds are a key Instrument, in order to get fresh money to the markets. However, the worse the state, the higher the risk for the creditors of the bonds. And the more interest the state must pay to the creditors. Depending on the supply and demand of a "market price" for government bonds of different countries.

How does the ECB program ("Quantitative Easing")?

On 22. January 2015 has been decided by the European Central Bank (ECB), the program of "Quantitative Easing" ("quantitative easing") – in short, QE. Each month, the ECB bought for originally 60 billion euros of securities that are already on the market ("secondary market"), including government bonds of all EU countries. This is done according to a specific country key. According to the ECB, this loose monetary policy is necessary to prevent a renewed economic crisis. In a "Deflation" - that is, a Phase of the stronger of falling prices would also collapse the economy, the companies would have to reduce jobs. Since September 2018, the ECB has reduced the monthly purchase volume from 30 billion to 15 billion. In 2019, the Net purchases should end then.