Brussels, 21/06/2016 (Agence Europe) - On Tuesday 21 June, the German Constitutional Court rejected an appeal brought against the OMT programme for the mass buyback of public securities announced by the ECB in 2012, but which has not yet been used.
The Karlsruhe-based Court decided that the Bundesbank could participate in a programme of this kind for the buyback of bonds as long as these are limited in volume and not announced in advance.
The 'outright monetary transactions' programme is the response of the Frankfurt-based monetary institute to the famous declaration of its President, Mario Draghi, who pledged in summer 2012 to do “whatever it takes” to overcome the sovereign debt crisis in the Eurozone.
In 2014, the Karlsruhe Court brought the matter before the Court of Justice of the EU for a preliminary ruling, marking a first in the history of the German court (see EUROPE 11014). It questioned the compatibility of the OMT programme with the European Treaties, which confer on the ECB the main duty of tackling inflation and prohibit it from any disguised monetary financing of the Eurozone countries (article 123). In June 2015, the Court of Justice of the EU ruled that the OMT programme did comply with the Treaties, as it maintains the unique nature of the monetary policy (see EUROPE 11336). It also felt that it was proportionate: any country benefiting from it will be the subject of a bailout plan of the European Stability Mechanism (ESM) and the buyback of securities on the secondary markets will be governed by strict conditions.
On Tuesday, the European Commission welcomed the fact that the Karlsruhe Court had in substance confirmed the decision of the European Court of Justice. “The European Central Bank acts within its mandate as foreseen by the Treaty on the Functioning of the EU”, it states in a press release. (Original version in French by Mathieu Bion)