A group of sixteen businessmen and academics said Thursday they had appealed to the German Constitutional Court against the emergency program launched in March 2020 by the European Central Bank in response to the Covid-19 pandemic.
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This aid, taking the form of massive debt buybacks, mainly public, under the name of “PEPP“, is “a blatant case of public fundingIllegal states, said Markus Kerber, professor of economics at TU University of Berlin and head of the group of applicants, in a statement. The European treaties prohibit the ECB from helping direct financing of governments in the euro area by resorting to the “printing machine“. This program of support for the economy must be confirmed this Thursday by the ECB at the end of its monetary policy meeting, with an envelope of 1.850 billion euros to be committed by March 2022.
The ECB «exit from its skills framework»
The petition against the PEPP program was filed on March 8 in the Karlsruhe court, a spokesperson confirmed to AFP. By deciding a year ago to use this weapon intended to curb the negative impact on economies linked to the pandemic, the ECB is “definitively exit from its skills frameworkAdds Kerber.
The latter had already dragged the institution guardian of the euro before the German supreme judge in two similar cases already judged and related to the unlimited debt buybacks (OMT) launched in 2012 in the face of the debt crisis, then last year on quantitative easing or “THATDating from 2015 to remove the specter of deflation in the euro zone. The German Supreme Court will now examine the admissibility of this request, without giving any time horizon.
In the judgment on the “THAT“Of May 2020, which left out the”PEPP“Barely starting, the judges had caused a sensation by giving three months to the ECB to justify its buybacks of public debt by billions, since they were leaving its strict role of steering rates. This warning shot, which has since been resolved, posed a temporary threat to the ECB’s support programs for the euro zone and to the future of the single currency as a whole.
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In the same judgment, the judges affirmed that debt buybacks under any program should have limits, only concern securities with minimum financial ratings and respect the key to the distribution of countries in the capital of the ECB.
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