12 Jun 2013

Court challenge to ECB policy in Germany

7:50 am on 12 June 2013

A promise by the European Central Bank to do "whatever it takes" to save the euro is being challenged in the German Constitutional Court.

The plaintiffs are a diverse group of German politicians, lawyers and citizens.

The ECB's vow to buy the bonds of eurozone countries if they come under severe pressure has been credited with arresting the eurozone crisis.

But the head of Germany's central bank is expected to tell the court that the policy breaches Germany's constitution.

Bundesbank president Jens Weidmann believes it is illegal because there is no limit to Germany's spending liability under the scheme, and that it is effectively a back-door way of providing loans to the governments of other countries.

The BBC reports the court will also hear from supporters of the scheme, such as ECB board member Joerg Asmussen of germany.

He told the Bild newspaper on Monday that a court order to withdraw the programme would have "significant consequences".

Opening the hearing at the Federal Constitutional Court in Karlsruhe, court president Andreas Vosskuhle said the success of the ECB's measures would play "no role" in deciding whether they were constitutional.

"We will have to decide to what extent the ECB makes use of competences which have not been given to it and were not allowed to be given to it as far as the constitution is concerned, and to what extent the normal citizen is affected by this," he said.

Finance Minister Wolfgang Schaeuble argued that the ECB's actions did not fall under the jurisdiction of the court.

It was "up to the ECB to decide, within its wide remit, which are the correct monetary policy measures to take," he said in court.