ECB faces lawsuit in Germany over coronavirus aid

The euro sculpture is seen outside the headquarters of the European Central Bank (ECB) in Frankfurt, November 5, 2013. — Reuters pic
The euro sculpture is seen outside the headquarters of the European Central Bank (ECB) in Frankfurt, November 5, 2013. — Reuters pic

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BERLIN, March 11 — A group of 16 German businessmen and academics said today they have taken the European Central Bank to court over its emergency response to the coronavirus pandemic.

The group said in a statement that the Frankfurt-based institution was “going beyond its competence” with the €1.85 trillion (RM9 trillion) pandemic emergency purchase programme (PEPP).

Launched last March and scheduled to run until March 2022, the PEPP is an emergency bond-buying programme set up to help the 19 eurozone nations weather the coronavirus shock, in large part by buying public debt.

The plaintiffs said the programme “clearly violates the prohibition of monetary financing”.

The complaint was filed before the Federal Constitutional Court based in Karlsruhe. A spokesman for Germany’s highest legal authority confirmed it was received on Monday.

The group’s leader, Markus Kerber, an economics professor at Berlin’s TU university, has hauled the ECB before the constitutional court twice before.

The most recent was a high-profile case against the ECB’s quantitative easing (QE) bond-purchasing programme introduced in 2015 to ward off deflation.

In a stunning decision in May last year, Germany’s Constitutional Court threatened to block the Bundesbank, the central bank, from participating in the programme unless the ECB could show within three months that its government debt purchases were not “disproportionate”.

While the court made clear its ruling did not affect newer ECB programmes to shore up the economy during the pandemic, it raised uncertainty over an important stimulus tool at a time when Europe was facing it worst economic storm since World War II.

The German parliament later passed a resolution saying it was satisfied the bank had not overstepped the mark. — AFP

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