The ECB's massive interventions on secondary markets in the context of the 'Quantitative Easing' operation are "proportionate" and, in the view of the German government, the Bundesbank "is entitled to continue to participate in their implementation", German Finance Minister Olaf Scholz said in a letter to the president of the German Chamber of Deputies, AFP reported on Monday 29 June.
The letter comes in response to the judgement of the German Constitutional Court in Karlsruhe, which in early May challenged the proportionality of the ECB's very accommodative monetary policy at a time when the euro area was facing a risk of deflation in 2015 (see EUROPE 12480/17). The ruling also calls into question the primacy of EU law over national law, despite the fact that the EU Court of Justice had validated the ‘Quantitative Easing’ operation at the end of 2018.
Like the ECB last week vis-à-vis the Bundesbank, Scholz, who said he had had "multiple conversations" with the German central bank and the ECB, said he would forward to the Karlsruhe court a series of ECB documents justifying the merits of the ECB's action. And to be "convinced" that the ECB would comply with the requirements of the German Federal Court ruling.
The ECB was given three months to further justify its action, failing which the Bundesbank would have to phase out the Quantitative Easing operation.
Mr Scholz's letter shows the willingness of the incoming German Presidency of the EU Council to reach a solution to this thorny issue as the EU-27 try to reach an agreement on a post-2020 budget including a major European Recovery Plan. Above all, during the Covid-19 pandemic, the ECB launched the PEPP operation to massively repurchase mainly public securities, under more flexible terms than those of ‘Quantitative Easing’, and this operation could be subject to further recourse in Germany.
As guardian of the European Treaties, the Commission has not yet decided whether to open infringement proceedings against Germany. (Original version in French by Mathieu Bion)