The ECB's purchase of government bonds was an attempt to save countries such as Greece, Spain and Portugal from default. It was particularly controversial in Germany, where multiple lawsuits challenged its legality.
The European Union's top court on Tuesday ruled that the European Central Bank (ECB) decision to buy up the sovereign debt of its own member states in 2015 was valid and within its mandate. This followed several legal challenges to the measure in Germany.
The ECB's policy was an attempt to prop up struggling economies following the sovereign debt difficulties in Greece and several other eurozone members in the aftermath of the 2008's Great Recession.
Read more: Will the ECB stop buying government bonds?
The ECB had hoped that by buying government bonds, as part of its wider "quantitative easing" program, it would lower the interest rates faced by heavily-indebted members that were struggling to borrow more money at competitive rates on the markets.
ECB 'has to adopt measures'
The Luxembourg-based EU court said in Tuesday's ruling that the program "does not exceed the ECB's mandate" and that "the program falls within the area of monetary policy, in respect of which the EU has exclusive competence for the member states whose currency is the euro, and observes the principle of proportionality."
Read more: A timeline of Greece's long road to recovery
"To exert an influence on inflation rates, the ESCB (European System of Central Banks) necessarily has to adopt measures that have certain effects on the real economy," the court said.
Preventing the ECB and national central banks from buying bonds "might — in particular in the context of an economic crisis entailing a risk of deflation — represent an insurmountable obstacle to its accomplishing the task assigned to it" of maintaining price stability, it added.
law/msh (AFP, dpa)