Konflikten mellem den tyske forfatningsdomstol og ECB skal ikke overvurderes, mener Commerzbank. De betingelser, som forfatningsdomstolen stiller, hindrer reelt ikke ECB i at fortsætte sit opkøbsprogram. ECB må kunne argumentere sig ud af problemet. Forfatningsdomstolen vil ikke udsætte EUs monetære union for et sammenbrud.
Uddrag fra Commerzbank:
German court greenlights ECBs PSPP – and attaches some strings
As expected, the German Federal Constitutional Court did not stop the ECB’s PSPP
government bond purchases. The judges do not consider this to be a violation of the
prohibition on monetary state financing.
However, they complain that the ECB has not reviewed the proportionality of the purchases, although the ECB can do so quite easily. In the end, the Federal Constitutional Court will probably also not stop the new PEPP bondbuying program.
Federal Constitutional Court does not see monetary state
financing, …
The Federal Constitutional Court (FCC) delivered its verdict on the PSPP government bond
purchase program.
The most important part of the judgment is to note that the judges do not see the purchase of government bonds as a violation of the prohibition on monetary government financing, even though in some countries the ECB holds almost a third of all government bonds outstanding, and highly indebted countries such as Italy would probably have considerable difficulties in financing themselves on the capital market without the ECB’s purchases (chart). In principle, the Constitutional Court has thus given the ECB the green light.
… but calls for an assessment of the proportionality of the program
However, the judges complained that the ECB had not reviewed the proportionality of the multibilliondollar bond purchases. It also criticizes the European Court of Justice (ECJ), which has waived such an examination.
In the words of the German Court: “The review undertaken by the CJEU with
regard to whether the ECB’s decisions on the PSPP satisfy the principle of proportionality is not comprehensible; to this extent, the judgment was thus rendered ultra vires”, i.e. beyond the legal powers of the ECJ.
The Bundesbank may continue to participate in the purchase program only if the ECB catches up with the proportionality test within three months. This is an affront to the ECB.
But with its armada of economists and lawyers, the ECB can handle such an audit. The ECB will continue its PSPP bond-buying program.
But what about PEPP?
The ruling of the Constitutional Court referred to the PSPP bond-buying program, but not to the PEPP purchase program which has been decided upon under the influence of the Corona crisis.
In this context, it is interesting that the FCC ruled that the ECB did not violate the prohibition on monetary government financing because, among other things, (1) the ECB established a purchase limit of 33% per bond, and (2) it is distributing the purchases by country according to the share of the capital of the ECB held by the national central banks.
But it is precisely these requirements that are partially suspended or interpreted very flexibly within the framework of the PEPP. Based on the wording of today’s ruling, the PEPP purchase program could be under risk from a future ruling of the German constitutional court.
But first, it may take years for the Court to rule on an action against the PEPP program. Until then, the program may be terminated in any case because PEPP is primarily intended to combat the consequences of the Corona epidemic. Secondly, the judges at the FCC do not operate in a vacuum.
They are aware that, without ECB bond purchases, highly indebted countries such as Italy would probably have massive problems financing themselves on the capital market. The judges would not be prepared to risk the stability of the monetary union in that case.
ECB buys lots of Italian government bonds
Deviation of monthly net PSPP purchases from ECB.
