16.06.15

ECJ rules that OMT bond purchase program of ECB is in line with EU law

ECJ: OMT program for the purchase of government bonds on secondary markets does not exceed the powers of the ECB in relation to monetary policy and does not contravene the prohibition of monetary financing of eurozone member states

ECJ approves ECB bond buying

The European Court of Justice (ECJ) ruled on Tuesday that the OMT bond purchase programm of the European Central Bank is compatible with EU law. The Court finds that "the OMT program, in view of its objectives and the instruments provided for achieving them, falls within monetary policy and therefore within the powers of the ESCB." In seeking to safeguard an appropriate monetary policy transmission, that program is likely both to preserve the singleness of monetary policy and to contribute to its primary objective, which is to maintain price stability, the Court reasoned. The ECJ also stated that the OMT program does not infringe the principle of proportionality. Germany's Constitutional Court had referred the case to the ECJ at the start of last year.

cep expert Bert Van Roosebeke told the Financial Times: “It’s a very clear defeat for the German court. On the point of whether this is an economic or monetary policy, the European court said it is monetary policy and so within the ECB’s mandate.”