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Bundesbank must decide on ECB bond purchases, top court judge says


© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in Frankfurt

BERLIN (Reuters) – The decision on whether Germany should pull out of the European Central Bank’s bond-buying programme lies with the Bundesbank, a judge in Germany’s highest court said in remarks published on Sunday.

Germany’s Constitutional Court ruled in May that the ECB overstepped its mandate with over 2 trillion euros of government bond purchases, ordering the Bundesbank to quit the scheme unless the ECB can prove proportionality within three months.

Peter Huber, a conservative judge at the court who drafted the ruling, told the Frankfurter Allgemeine Zeitung that the court was no longer involved and the decision on whether to quit rested with Germany’s central bank.

“The Bundesbank is bound by our decision, but it must determine on its own responsibility whether the ECB’s statement of reasons fulfils our requirements or not,” Huber said. “The Federal Constitutional Court is no longer involved.”

The ruling set off an unprecedented legal conflict with a national court looking to exert jurisdiction over an institution of the European Union and trying to curtail its policy framework, seen as an encroachment on ECB independence.

In a compromise deal, the ECB agreed last week to give vital documents underpinning its policy decisions to Bundesbank chief Jens Weidmann, who can then present them to the German parliament and government, as demanded by the court ruling.

Astrid Wallrabenstein, a judge-designate at the court, told a newspaper last week she was optimistic a solution to the row over the ECB’s bond purchases can be found.

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Wallrabenstein, who was nominated by the pro-European Greens, is expected to make the Constitutional Court, widely seen as having a narrow Eurosceptic majority, less confrontational toward the ECB.

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