August 3, 2020

The German Parliament gives its “boost” to the purchase of ECB bonds

The Lower House of the German Parliament (Bundestag) on ​​Thursday gave its “boost” to the program of purchase of sovereign debt securities of the European Central Bank (ECB), declaring it proportionate and appropriate to the goals of the institution.

The Constitutional Court (TC) had determined, in a judgment of May 5, that the Government and the Bundestag were under an obligation to examine the proportionality of the ECB’s sovereign debt purchase program.

The lack of such an examination, according to the TC, made the program “partially contrary” to the German Constitution.

The resolution approved today declares that the review of the program in the terms requested by the Constitutional Court is given, since the ECB made an examination of the necessity and appropriateness of the monetary policy measures.

In addition, the effects on economic policy of the bond purchase program and their proportionality were considered in view of the monetary goals pursued.

With this, the requirements of the TC ruling are considered fulfilled.

“The program is proportional and the review of proportionality is a matter for the ECB, not the Bundestag or the TC. We have received the necessary documents and have been informed, for example, in a recent appearance by the President of the Bundesbank, Jens Weidmann” , said the social democratic deputy Christian Petry in defense of the resolution.

Petry highlighted the importance of the action of the ECB in the fight against the debt crisis, and recalled that, in his sentence, the Constitutional Court had determined that the program for the purchase of securities had not been a tool to finance states through monetary policy.

Florian Toncar, of the Liberal Party (FDP), pointed out that, in a resolution subsequent to the ruling of the adjudicatory body, the ECB had shown that there had been an examination of the proportionality of the securities purchase program.

The resolution was jointly presented by the parties of the great coalition of the Government, the Christian Democratic Union (CDU) and the Social Democratic Party (SPD), as well as the FDP and the Greens.

On the part of the CDU and CSU joint parliamentary group Andreas Jung and Michael Frieser stressed that the resolution met the requirements of the TC and, at the same time, respected the independence of the ECB.

The Left abstained because it considered that the resolution is halfway there and, according to Deputy Fabio Di Massi, an extension of the ECB’s mandate should be promoted that would allow it to finance the states.

“That is necessary, because the ECB is the only institution in the eurozone that cannot be broken,” he said.

A proposal for an additional resolution to that effect presented by La Izquierda was rejected, as was another proposal by the FDP, which called for the creation of a permanent commission to examine the ECB’s measures.

For the Greens, Franzisla Brantner said that, in the future, efforts should be made to formulate a common fiscal policy in the European Union (EU) so that the ECB was not left alone to face the crisis.

The far-right Alternative for Germany (AfD) voted against, criticizing that the resolution had been approved after just half an hour of debate and without the deputies having the necessary time to examine the documents provided by the Government, the Bundesbank and the ECB.

In a letter to Bundestag President Olaf Scholz, Finance Minister Olaf Scholz had previously stated that he considered the demands made by the Constitutional Court regarding the bond purchase program to be fully met.

The German Government and the Bundestag had three months to satisfy the requirements of the German Constitutional Court and for the Bundesbank to continue participating in the bond purchase program.

The deadline expired on August 4.


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