Four governing council members warn of risk to central bank independence
The European Central Bank is expected to resist pressure from Germany’s constitutional court for it to produce a justification of its massive purchases of government bonds, according to several members of its governing council.
Four ECB council members told the Financial Times on Wednesday that they were determined it should not respond directly to the German court, arguing such a move would impinge on the central bank’s independence and expose it to pressure from other national courts. A majority of ECB council members oppose giving a response, they said.
The constitutional court in Karlsruhe on Tuesday ordered the German government to ensure the ECB carried out a “proportionality assessment” of its purchases of government bonds to ensure their “economic and fiscal policy effects” did not outweigh other policy objectives. It threatened to prevent the Bundesbank, Germany’s central bank, from making further asset purchases if the ECB failed to comply within three months.
The German court stunned lawyers and legal scholars by partially rejecting a 2018 ruling by the European Court of Justice that ECB bond buying was legal. According to legal scholars it was the first time a national court had declared an ECJ judgment invalid and could undermine the uniform application of EU law, one of the bloc’s most important achievements.
“The court’s arguments are ridiculous and we could easily answer them in five minutes, but we absolutely should not do so,” said one member of the ECB council, who added that this view was shared by the 24 other members of the bank’s top decision-making body who held a conference call on Tuesday evening to discuss the judgment.
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