BUSINESS

Professors and entrepreneurs file complaint against ECB policy

TAGS: Banking, Euro

A group of professors and entrepreneurs filed a complaint against the European Central Bank's monetary policy this week at Germany's top court, the Welt am Sonntag newspaper said, as German criticism of the ECB grows louder.

A complaint would open a new chapter in a long-running legal battle between Europe's central bank (ECB) and groups within the euro zone's biggest economy who want to curb the bank's power.

A challenge to an emergency plan the ECB made at the height of the euro zone crisis is also back at Germany's Constitutional Court after being rejected by Europe's top court in June. The German court will make a final ruling this year.

There has been widespread criticism in Germany of the ECB's monetary policy in recent weeks, with politicians complaining that low interest rates are hitting the savings and retirement provisions of ordinary Germans.

Welt am Sonntag said the issue in the latest complaint filed at the Constitutional Court was whether the ECB had overstepped its mandate by extensively buying government bonds and with its plan to start buying corporate bonds.

A spokesman for the Constitutional Court could not immediately comment on the report.

The newspaper said the professors and entrepreneurs thought the ECB was starting programmes that contained incalculable risks for the German central bank's balance sheet, and hence for German taxpayers, under the pretence of reaching its inflation target of just under 2 percent in the medium term.

"The ECB's current policy is neither necessary nor appropriate to directly revive the economy in the euro zone by increasing the inflation rate to around 2 percent in terms of consumer prices," Markus Kerber, a lawyer and professor of public finance who initiated the complaint, was quoted as saying.

Kerber said the ECB was losing sight of the principle of the "proportionality" of its measures, according to Welt am Sonntag.

Kerber confirmed in an email that he had filed a complaint.

A spokeswoman for the ECB declined to comment on the report.

In March, the ECB unveiled a large stimulus package that included cutting its deposit rate deeper into negative territory, expanding it asset buying programme and offering free loans to the corporate sector to stimulate growth.

German central bank governor Jens Weidmann, who sits on the European Central Bank's Governing Council, said on Wednesday the ECB's expansionary monetary policy stance was "justified for now" while Bundesbank board member Andreas Dombret also said the ECB's policy was justified by a subdued growth outlook in the euro zone.

The newspaper said Kerber was particularly concerned about the budgetary risks that could arise for Germany from the new corporate bond buying programme.

Kerber hoped to get the court to at least prevent the Bundesbank from continuing to be involved in ECB asset purchase programmes and to stop it from participating in the ECB's corporate bond buying scheme due to start in June, it added.

Separately, Isabel Schnabel, a member of the Council of Economic Experts which advises German policymakers, said in a newspaper interview published on Sunday that the ECB had become too powerful.

Speaking to Frankfurter Allgemeine Sonntagszeitung, Schnabel said the ECB had become an "almost political institution" because politicians had often failed to act, such as during the Greek crisis, forcing the ECB to act instead.

"The ECB had gained a lot of power even though it is hardly subject to parliamentary controls," she said.

[Reuters]

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