A legal wrangle over the European Central Bank’s bond-purchasing program will help focus minds on the need for closer European integration, Greek central bank chief Yannis Stournaras said on Tuesday.
Germany’s constitutional court dropped a legal bombshell a week ago by ruling that the ECB had overstepped its mandate with purchases of two trillion euros worth of eurozone government bonds over the past five years.
The court gave the ECB three months to explain the proportionality of its bond purchases or risk losing Germany’s Bundesbank - one of 19 national central banks that are members of the ECB - as a participant.
Stournaras, a member of the ECB’s Governing Council, said he was confident Germany would find a solution.
“I continue to be optimistic. I think this decision will lead to others which will ultimately help with closer European integration,” he said in an online discussion on the implications of the court’s decision on ECB policy.
“I think Germany will do whatever is possible for a civilized, diplomatic solution.”
The ruling poses a conundrum for Berlin, which is bound to respect the court but at the same time does not want to erode the independence of the ECB, whose unprecedented stimulus has kept the eurozone intact.
However Stournaras said markets had taken the decision in their stride.
“Markets do not believe that (the ruling) will create a grave issue and that is important,” he added.