European Central Bank

EU and Germany a Step Away from Legal Battle as Latter Criticises ECB Bond-Purchase Program

0
589

European Union and Germany might soon get entangled in a legal dispute, after the bloc’s leading economy raised question over the legality of  European Central Bank’s bond-buying program. In a recent judgement passed by Germany’s highest court, it criticised not only the ECB program for its side effects but also the European Court of Justice. 

On Tuesday, Germany’s court asked the ECB to submit an explanation for its 2015 bond-buying scheme, which claimed to increase eurozone growth after the financial crisis. The European nation said that the side effects of the project exceeded its benefits, putting German government under huge financial burden. The judges in Karlsruhe gave the ECB three months to justify the benefits of its asset purchasing and launching the stimulus. 

The judgement added that if ECB failed to present an explanation, it would ban the Deutsche Bundesbank, German central bank from contribution to the two-trillion-euro scheme.

The judgement further clarified that the announcement seeking ECB for an explanation, “does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis,” considering the sensitivity of the circumstances. 

On Sunday, in response to, what can be called as a historic judgement, European Commission President Ursula von der Leyen Warner of suing Germany as the judgment has directly challenged the EU’s single currency and its joint legal system. In her statement she said, “The recent ruling of the German Constitutional Court put under the spotlight two issues of the European Union: the euro system and the European legal system.” She added, “The final word on EU law is always spoken in Luxembourg. Nowhere else. We are now analysing the ruling of the German Constitutional Court in detail…And we will look into possible next steps, which may include the option of infringement proceedings.”

The Karlsruhe court directly challenging the authority of the union over the member states said that that “the Member States remain the ‘Masters of the Treaties’ and the EU has not evolved into a federal state.” It is time for the Union to redefine its role in the wake of emerging power struggle, before it is too late.

 

Leave a reply