Bundesbank Will Continue Bond Buying as German Court Spat Ends
(Bloomberg) -- Germany’s Bundesbank said it will continue to take part in European Central Bank asset purchases after a legal standoff with the country’s constitutional court was resolved.
Following deliberations in the ECB’s Governing Council and a supply of documents to German lawmakers and the federal government, the Bundesbank takes the view that the court’s demands have been met, a spokesperson said.
“The German Bundesbank will therefore continue to take part in purchases under the framework of the PSPP,” according to an emailed statement.
Germany’s top court had ruled in May that the ECB’s so-called public sector purchase program could be illegal. The judges said the German parliament should have challenged the ECB to show that policy makers had considered adverse side effects.
While the verdict didn’t include the central bank’s pandemic bond-buying plan, it was seen as a threat to the ECB’s ability to add stimulus.
To help lawmakers settle the dispute, the Governing Council authorized the disclosure of several documents in late June. Officials also concluded at their June policy meeting that asset purchases are an adequate tool, with chief economist Philip Lane arguing that all of the ECB’s buying schemes are “proportionate measures” for pursuing price stability.
Germany’s Bundestag backed the older PSPP program last month.
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