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 A favorable ruling had been widely expected but the European Court
of Justice's judgment is a firm endorsement for the ECB, granting it
leeway to take dramatic action in an emergency, albeit with some
general conditions.
The case had been brought by a 35,000-strong group from Germany,
including politicians and academics, who sought to dismantle the OMT
bond-buying scheme the ECB created in 2012 but never used.
In a statement explaining its ruling, the court set out certain
conditions, saying safeguards must be built in to ensure any such
program did not break rules that stop central banks from financing
governments.
Experts said the decision would strengthen ECB President Mario
Draghi hand in managing emergencies such as a possible departure of
Greece from the euro zone.
"It gives the ECB wide-ranging liberties to react fast and flexibly
to crisis situations," said Marcel Fratzscher, who heads the
Berlin-based DIW economic research institute.
The OMT (Outright Monetary Transactions) program was launched at the
height of the euro zone debt crisis, shortly after Draghi said in a
speech that the ECB would do "whatever it takes" to prevent the
collapse of the currency union.
It allows the ECB to buy bonds of a euro zone country on the open
market if its government has agreed a reform program in return for
euro zone funding.
The plan could yet be dusted down if Greece were to leave the euro,
Fratzscher said.
REBUFF
The judgment is a milestone in a long-running dispute between the
ECB and skeptics in Germany, the largest of the euro zone's 19
members, about printing money and the limits of central bank power.
It represents a victory for the ECB, which welcomed it on Tuesday.
Following the ruling, Germany's finance ministry restated its
objections to any central banking financing of states and said the
European court had asked for safeguards to ensure this would not
happen.
The case was a clear reminder that many in Germany have misgivings
about a currency their then-chancellor Helmut Kohl helped create in
the early 1990s but which they now fear has bound their nation to
bail out spendthrifts such as Greece.
Judges rebuffed German critics of bond-buying, who argue that by
effectively printing money the ECB is taking pressure off countries
to reform. They had argued that the OMT plan broke rules stopping
central banks from financing governments.
Hans-Werner Sinn, the head of Germany's IFO think tank and
long-standing critic of the ECB, attacked the court for its
"regrettable mistake".
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Others, including Lutz Goebel, president of a German association for
family-owned companies, were also critical of the ruling. "Through
its actions, the ECB is going far beyond its mandate," he said.
The pro-ECB line could now set the European and German courts on a
collision course.
Germany's Constitutional Court, asked to rule on complaints
by the German group, had said there was good reason to believe the
OMT broke rules forbidding the ECB from funding governments.
Bernd Lucke, a founder of Euroskeptic party Alternative for Germany
(AfD), said he saw a massive conflict ahead.
"The verdict is a provocation and humiliates the Federal
Constitutional Court, whose legal opinion is being dismissed as if
it were the work of an unqualified apprentice," he said.
His party will soon launch a legal challenge to the ECB’s latest 1
trillion euro plus money printing program, he added.
Germany's top court had referred the case to the European Union's
highest court for its view in February but implicitly reserved the
right to make a final ruling.
Peter Matuschek of polling institute Forsa said that while most
Germans had thought it necessary to help Greece in the early stages
of the crisis, "patience with Greece has run out".
Last week, a poll showed over half of Germans want Greece to quit
the euro zone, compared with around a third in January.
Economy Minister Sigmar Gabriel said at the weekend that more and
more people in Europe felt "enough is enough" while senior
conservative lawmaker Wolfgang Bosbach suggested he might resign if
the German parliament agreed further aid for Greece.
(Additional reporting by Gernot Heller in Berlin and Frank Siebelt
in Frankfurt; Editing by Catherine Evans)
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