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ECJ decides on state bonds purchases

To the rescue of the Euro have taken Europe's monetary guardian. Even critics attest to of the European Central Bank (ECB), under the leadership of Italian Mario Draghi, the currency area in recent years stabilized. But that the Central Bank is up today huge billions in the purchase of government bonds is controversial. Once again is asked, the judgment of the European court of justice (ECJ).

which ECB-measure it?

the billion-dollar bond-buying programme by the Central Bank – in the jargon as "Quantitative Easing" (QE). Since March 2015, the ECB will acquire in this framework, bonds of the Euro States. Since June 2016, the companies are also bonds on the shopping list. Almost 2.6 trillion Euro invested, the ECB so far in such papers. Since October 2018, the volume is a monthly sum of 15 billion euros.

Why the ECB will start buying of all securities?

the Primary objective of the ECB, stable prices and a stable currency for the 340 million people in the 19 States of the Euro area. In the medium term, the Central Bank is aiming for currency, an inflation rate of just below 2.0 percent. Because the inflation rate in previous years was very low, helped by the ECB by lowering the interest rates drastically and at the same time via the purchase of government and corporate bonds, the huge sums of fresh money in circulation brought. The theory: When more money is in circulation, prices will rise and thus also attracts the inflation rate.

What States that the Central Bank buys their bonds?

countries so favourable to fresh money. Because you don't have to offer high interest rates for new securities, because the ECB is buying large stocks. This also helps economies to strong economies. For older calculations of Deutsche Bank, the German state seems to have saved alone in the years 2008 through 2016 worth nearly € 260 billion in interest. In addition, the purchase program the Central Bank has a psychological effect: The ECB is not signaled to consumers and businesses so that the economy in the lurch.

is Allowed to buy the Central Bank of all bonds?

critics consider this to be state financing via the printing press. A reproach: Germany to pay, indirectly, the rescue of heavily indebted countries and fragile banks in southern Europe. In addition, the bonds animate purchase program, the States debt, and brake the necessary reforms. The ECJ had, however, already decided in the summer of 2015: in Principle, the ECB for the Euro-rescue state is allowed to buy bonds.

How to argue the plaintiff before the court of justice now?

The lawsuit relates to, among other things, of the Euro-critics, Bernd Lucke and Hans-Olaf Henkel, formerly leading representatives of the Alternative for Germany (AfD). "The result of the government bond purchase programme that the ECB is currently by far the largest creditor of the Euro States," says Lucke. "So the ECB is financing the national debt of alarming proportions."

The plaintiff argued also that the decision of the ECJ has, in addition, beam power, because the ECB have said the purchases of sovereign bonds now to be a part of their normal monetary policy instruments.

How to do it with the purchase of the program?

Europe's policymakers have heralded the exit from its Anti-crisis policy. This Thursday (13.12.) is likely to decide the governing Council of the ECB formally, the end of new bond purchases by year-end 2018. Abruptly, the ECB will close the money is not the locks but: the funds from expiring government and corporate bonds, to be invested by the Central Bank for the time being.

Who controls the ECB?

The Central Bank is de jure independent. This was in particular the German case of the establishment of the common Central Bank to 1. June, 1998 important, because they had made with the German Bundesbank, a good experience. "I think everyone will say, today, that we can stand, also thanks to their work, thanks to the work of the European Central Bank, better today than a few years ago in the middle of the crisis," said Federal President of Germany Frank-Walter Steinmeier during a visit to ECB Headquarters in Frankfurt in September of this year. "The Important thing for us is that the independence of the Bank in its decision in each case is ensured."

May make the Central Bank so, what do you want?

The ECB is not outside anyone's control, such as the President of the Federal constitutional court, Andreas Vosskuhle, in June 2016 on the occasion of a judgment by the highest German court in another method, the power of the ECB stressed: "The European Central Bank is subject to how each European Institution competence restrictive rules, compliance with which can be controlled by the courts." However, the ECB has created in the rule already for a long time facts, before the courts finally. In the present case, the Federal constitutional court on the Basis of the ECJ judgment does not decide its final decision, because the ECJ on the dispute.

what could the verdict?

The chances for a success of the plaintiff seem to be low. A key EU expert had recently found that the purchasing program was legal. It is not contrary to the prohibition of the state financing and did not go beyond the mandate of the ECB, said the ECJ advocate General Melchior Wathelet. The evaluation of the advocate General is a judge of the Supreme EU court is not binding, in the majority of cases, they follow her. (nag/sda)

Created: 11.12.2018, 08:46 PM

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