ECB's government bond purchases partially violates the law, top German court says

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The First Senate of the Federal Constitutional Court in Karlsruhe, southwestern Germany on November 5, 2019.

ULI DECK

The German government and central bank failed to take steps to challenge the European Central Bank (ECB) in its decision to purchase government bonds, Germany's top court said in a ruling Tuesday. 

However, the overall ECB stimulus program has not violated the law, the court said. 

German judges assessed the ECB's quantitative easing program, which was introduced in 2015 until 2018 and then restarted in late 2019. The idea behind this initiative was to prop up the euro zone economy by keeping borrowing costs low across the euro zone. 

The ECB stepped up government bond purchases in March in the context of the coronavirus package, in a stimulus packaged dubbed Pandemic Emergency Purchase Programme or PEPP. Analysts feared that the court decision on quantitative easing could raise problems to the pandemic program due to their similarity in nature.

However, the German court said: "The decision published today does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis."

This is a breaking news story and is being updated.

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