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German unrest over ECB buying

September 7, 2012

There is a growing number of German parliamentarians demanding action to counter Thursday’s decision by the European Central Bank to buy unlimited amounts of sovereign bonds from heavily indebted eurozone countries.

https://p.dw.com/p/164sK
The Euro logo is reflected in the glasses of European Central Bank's (ECB) President Mario Draghi as he attends the monthly news conference in Frankfurt April 4, 2012.
Image: Reuters

Klaus-Peter Willsch of Chancellor Angela Merkel's Christian Democratic Union (CDU) called for a legal challenge to be filed to determine whether the European Central Bank (ECB) had acted within ist jurisdiction.

Efforts should be made to ascertain "whether the ECB is overstepping its mandate," Willsch told public broadcaster Deutschlandfunk on Friday.

He also called for Germany to be given a veto in the European Central Bank's governing council as the largest contributor to the lender.

Bundestag lawmaker Frank Schäffler of the Free Democrats, the junior partners in Merkel's center-right coalition, went even further, saying that the central bank was abusing its powers to finance sovereign governments.

"The ECB is now becoming a 'bad bank' for all of the junk credit in Europe," Schäffler said in an interview with public radio station Deutschlandradio Kultur. “What happened yesterday could have historic dimensions… They are trying to dump these bonds with the tax payer picking up the tab.”

Merkel cautious, Asmussen in favor

Peter Gauweiler of the Christian Social Union, the Bavarian sister party to the CDU told the Augsburger Nachrichten newspaper that the ECB's decision contradicted "the ban on government financing expressly set out in the [EU] treaties of Maastricht and Lisbon."

Following ECB President Mario Draghi's unveiling of the bond-purchasing plans on Thursday, Chancellor Angela Merkel chose her words carefully.

"The ECB is acting within its independence and within its mandate and is responsible for the stability of the currency, the value of the currency, and to take the appropriate decisions," she said.

Merkel, though, has expressed public support for the head of the German Bundesbank, Jens Weidmann, who, as a member of the ECB's governing council appeared to be the lone voice opposing the move.

However a German member of the ECB's executive board, Jörg Asmussen, took to the airwaves on Friday to defend the move.

In an interview with RBB-Inforadio, Asmussen praised the ECB for making it clear that such help would only be granted to countries who stick to strict, clearly defined rules.

"This measure cannot be allowed to lead to reduced pressure [on governments] to reform [their economies]," Asmussen said.

pfd/msh (dpa, DAPD, Reuters)