ECB insists bond buying programme 'within mandate'

Friday 07 February 2014 17.05
The ECB's OMT programme is widely credited with stabilising the euro
The ECB's OMT programme is widely credited with stabilising the euro

The European Central Bank insisted today that its contested Outright Monetary Transactions (OMT) bond buying programme did not breach its rules, after Germany's constitutional court expressed some scepticism.

"The ECB takes note of the announcement made today by the German constitutional court. The ECB reiterates that the OMT programme falls within its mandate," it said.

Germany's constitutional court earlier announced that it would consult the European Court of Justice with regard to the OMT programme.

It found "there are important reasons to suggest that it goes beyond the mandate of the European Central Bank's monetary policy and encroaches on the responsibility of the member states and contravenes the ban on monetary deficit financing."

Nevertheless, "the senate believes it is possible" that limitations could be imposed on the OMT programme in such a way as to make it compatible with EU law, the court added.

The ECB's OMT programme, announced by ECB chief Mario Draghi in September 2012 at the height of the sovereign debt crisis, is widely credited with stabilising the euro.

The German court said it will rule on the legality of the currency bloc's permanent bailout scheme, the European Stability Mechanism (ESM), on March 18.

Speaking in Dublin today, ECB executive board member Yves Mersch said that the actions of a European institution could only be assessed by the European Court of Justice and not by a national court.

“I consider the ruling a vindication of that view," he said.

“At the ECB we are convinced that the OMT political decision is fully in line with our mandate, and it has been highly successful in terms of efficiency and effectiveness"