The European Court of Justice has upheld a key anti-crisis measure announced by the European Central Bank in 2012 but never used. Judges ruled buying bonds from ailing eurozone countries did not represent ECB overreach.
Judges at the European Court of Justice (ECJ) said on Tuesday that the European Central Bank (ECB) could buy sovereign bonds on secondary markets from ailing eurozone countries to stimulate the bloc's economy.
"The program did not run afoul of the central bank's monetary powers and did not violate any rules related to the financing of eurozone member countries," judges wrote in their ruling.
With Tuesday's decision, the top EU court threw out objections by some German lawmakers and economists who had argued that the bond-buying scheme, known as the Outright Monetary Transactions (OMT) plan, was tantamount to indirectly financing governments by printing fresh money.
Confirming the legality of OMT also provided backing for the ECB's current large-scale bond-buying program that has seen some 60 billion euros pumped into the eurozone economy on a monthly basis since March.
That effort, also referred to as quantitative easing, is aimed at kickstarting economies using the common currency and warding off deflationary pressures. The OMT scheme, which ECB chief Mario Draghi announced in 2012 but never actually tapped, helped calm volatile markets at the time.
It could have seen the ECB buying bonds from eurozone crisis nations in unlimited quantity if deemed necessary to keep those states afloat financially. The plan aimed to alleviate pressure on governments that faced excessive market borrowing costs.
However, the mere mention of the scheme proved sufficient to calm investors and reassure markets, helping to stave off further European debt woes.
hg/cjc (AFP, dpa, Reuters)