A group of German businessmen and academics are taking the European Central Bank to court over its controversial bond-buying programme, their lawyer said on Tuesday.
Hessen: A group of German businessmen and academics are taking the European Central Bank to court over its controversial bond-buying programme, their lawyer said on Tuesday.
A complaint against the ECB`s corporate sector purchase programme was filed at Germany`s highest court, the Constitutional Court, on May 12, a court spokesman told AFP.
The business leaders argued that the central bank was "going beyond its mandate" in purchasing corporate bonds as part of its programme of so-called quantitative easing, or QE, and "needs to be urgently legally ring-fenced."
In the face of the failure so far by a raft of ECB policy measures in recent years to drive up inflation in the single currency area, the central bank announced in March that it would extend its sovereign bond-buying programme to include corporate sector bonds.
But in doing so, the ECB has "definitely given up its mask of monetary policy," its lawyer Markus Kerber told AFP.
"Through the massive purchase of corporate bonds, countries with high debt level and deficits in competitiveness such as Italy, Spain and France are supposed to improve the financing conditions of public companies.
"The criteria of the selection of those companies remain uncertain. The ECB has opened a new phase of a direct transfer policy bringing unforeseeable risks for Germany and the other hard currency countries of the eurozone," Kerber argued.
The complaint therefore asked the Constitutional Court to block the programme in Germany.
The ECB`s policy measures so far -- cuts in interest rates, ultra-cheap lending schemes for banks and most recently the QE programme -- have failed to kick-start inflation in the euro area, which the central bank estimates needs to stand at just under 2.0 percent to encourage healthy economic growth.
In April, the bloc`s inflation was negative, standing at minus 0.2 percent.
"There is total despair in the ECB leadership that none of the measures implemented so far are working," Kerber said.
It is not the first time that the ECB has been taken to court in Germany over its monetary policies.
A group of eurosceptics filed a suit against another debt purchase programme known as Outright Monetary Transactions (OMT) that was set up in 2012, but has ultimately never been used.
The constitutional court referred that particular case to the European Court of Justice, which subsequently ruled that the programme was in line with the ECB`s mandate.
But the constitutional court in Karlsruhe has yet to issue its own definitive ruling on the OMT scheme.