German judge, finance minister see scope to resolve dispute between Constitutional Court and ECB
By Alexander Bueso
Date: Monday 22 Jun 2020
(Sharecast News) - An incoming new judge to Germany's Constitutional Court signalled optimism that the dispute with the European Central Bank over the latter's bond buying programme could be resolved.
In remarks made to the Frankfurter Allgemeine Sonntagszeitung, Astrid Wallrabenstein, who was named to so-called second senate of the court by the country's Greens, said the ECB's Governing Council may not need to explain its actions further.
"What counts is an improved transparency of the decisions," Wallrabenstein reportedly said, pointing to recent moves by the European Commission and parliament in that regard.
In early May, the court ruled that the ECB continue conducting purchases but set a three-month deadline for it to provide a clear explanation of its rationale in order for the German central bank, the Bundesbank, to continue participating.
In doing so, the Karlsruhe-based judged appeared to challenger an earlier ruling from the European Court of Justice.
Yet what matter was to be taken seriously and if its demand were being taken seriously, then it could be in the court's interest to adopt an easier stance, she added.
German finance minister Olaf Scholz appeared to back her view, saying on Monday morning that in the end it would likely fall on Berlin to decide whether the ECB had provided sufficient explanations.
"This is not a drama without resolution. We will soon see there will be a resolution without drama," Scholz said.
Bundesbank President, Jens Weidmann, also waded into the debate at the start of the week, but in reference to the ECB's newest emergency bond buying programme.
According to Weidmann, it was of critical importance that the so-called Pandemic Emergency Purchase Programme not set the wrong incentives for public officials when it came to countries' finances.
"It needs to be clear that the PEPP is guided by our primary objective, linked to the pandemic situation, and therefore temporary in nature. Policy makers must not assume that we would keep the financing costs of governments low forever or iron out any differences in sovereign-risk premia."
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