German Constitutional Court opens hearing on ECB bonds | News | DW | 11.06.2013
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German Constitutional Court opens hearing on ECB bonds

Germany's top court has begun a hearing to decide the legitimacy of the eurozone central bank's sovereign bond-buying policy. While the scheme is credited with easing market fears, sceptics say it poses too big a risk.

Germany's Constitutional Court on Tuesday morning began its hearing into controversial European Central Bank (ECB) purchases, known as Outright Monetary Transactions (OMTs).

The central bank's decision to offer OMTs, in which it would buy up the sovereign debt of individual countries, is credited by some experts for helping to calm market fears and lowering borrowing costs of indebted nations.

The scheme was unveiled in August last year, but as yet no OMT has actually been carried out.

The plaintiffs at the Karlsruhe court - who include German politicians, lawyers and ordinary citizens - claim that the ECB has created a risk over which German taxpayers and officials have no control.

The opponents of OMTs also claim that the potential purchases of sovereign debt go beyond the bank's mandate as enshrined in EU treaties, which forbid it from financing governments.

Bundesbank's Weidmann to testify

The president of the Bundesbank, Germany's central bank, Jens Weidmann - who is among the most vocal critics of the scheme - was set to take the stand during the two-day hearing.

Taking the opposing side will be ECB board member Joerg Asmussen, who until last year was a senior German finance ministry official.

ECB President Mario Draghi has defended the OMT program, denying that it is effectively a scheme to print money to pay for governments' debts.

More than 35,000 Germans have brought a complaint against the OMT, illustrating a growing unease among some citizens in Europe's largest economy that they are being asked to pick up the debts of other countries.

rc/ipj (AFP, dpa, Reuters)