FRANKFURT – German opponents of the European Central Bank’s latest economic stimulus program have filed a legal challenge in an attempt to bar their national central bank from taking part.
The complaint in the Federal constitutional Court aims to keep the Bundesbank from taking part in the ECB’s upcoming purchases of bonds issued by corporations, a measure that pumps newly created money into the economy to lower borrowing costs.
The corporate bond purchases, which haven’t started yet, are part of a broader effort to raise inflation and growth that started with large-scale purchases of government bonds in March 2015.
The suit follows earlier, so far unsuccessful legal efforts by professors and legislators to block ECB stimulus, which many in Germany view as excessive and mainly benefiting countries with what are seen as uncompetitive economies or lax government finances.
Markus Kerber, a professor of law and finance at Berlin Technical University, said he was bringing the suit along with like-minded academics and heads of family-owned, midsize companies. He said ECB corporate bond purchases would distort business competition because such purchases would drive down borrowing costs for the companies whose bonds were being purchased.
Another objection is that any default on such bonds would be borne in part by German taxpayers, without parliamentary approval. “All risk-taking by public entities has to go through parliament,” he told The Associated Press.
The ECB relies on the national central banks to execute its market operations, so barring the Bundesbank from taking part would present a major roadblock.
A court spokesman confirmed the complaint was filed last week. A spokesman for the European Central Bank declined to comment.
Legislators and a citizens’ group earlier challenged a different ECB program, its offer to purchase government bonds issued by countries that get into financial trouble. That program, known as outright market transactions, is aimed at preventing financial crises. The program has never been used, but its mere existence was credited with helping prevent the breakup of the eurozone when it was announced in 2012. The European Court of Justice upheld the program last year but sent the matter back to a German court for further review.
This story has been corrected to show the accurate spelling of Kerber’s first name is Markus, not Marcus.