ECB back in court as German group seeks to curb its power
The European Central Bank returned to Germany's constitutional court to defend an emergency plan made at the height of the economic crisis in a long-running legal battle with a group of Germans who want to curb its power to act. In the court hearing, Yves Mersch, who sits on the ECB's executive board at the centre of policymaking, reasserted the bank's autonomy, defending the OMT bond-buying scheme created in 2012 but never used.
"The European Central Bank's Governing Council must be able to decide independently on future monetary policy, in order to fulfil its duty of maintaining price stability in the euro area," Mersch told the court. Judges in the court will make a final ruling later this year. Any outright rejection of Mersch's argument, which is not likely, could, for instance, make it hard for Germany's Bundesbank to participate in ECB bond buying - a major part of the central bank's policy arsenal.
Mersch played down German fears that there was a risk of Berlin having to recapitalise the Bundesbank if it were to suffer losses.
He conceded, however, that there could be need for such an injection if a central bank's capital was too thin for too long.
Such a step would also prompt a conflict between Europe's top court, which has earlier backed the ECB, and the judges of its most powerful country.
The German judges had been leaning in favour of an 11,000-strong group from Germany, including politicians and academics, who sought to dismantle the OMT programme. But the European Court of Justice - the EU's top legal authority - rejected the German group's challenge to the ECB's freedom to buy government bonds in an emergency.