Bundesbank chief to meet lawmakers in wake of court case

© Reuters. FILE PHOTO: 29th Frankfurt European Banking Congress (EBC) takes place in Frankfurt

FRANKFURT/BERLIN (Reuters) – Bundesbank chief Jens Weidmann will meet German lawmakers in a closed-door session on Wednesday, as part of efforts to defuse a constitutional crisis that had threatened to upend monetary policy in the 19-nation euro zone.

Germany’s top court ruled earlier this year that lawmakers failed to exercise appropriate control over the Bundesbank, which must quit the European Central Bank’s government bond purchase programme unless it could justify its participation.

The early May ruling threatened to force the euro zone’s biggest central bank to withdraw from a stimulus scheme that is credited with holding up growth before the coronavirus and averting a financial crisis amid the pandemic.

Since that ruling, the ECB has sent a justification of its 2.3 trillion euro Public Sector Purchase Programme to the German government and parliament, which was accepted by Berlin.

The Bundesbank has also agreed to participate in quarterly hearings billed as “monetary dialogue,” modelled after similar meetings held for the ECB President by the European Parliament.

The hearing also comes as the ECB faces a fresh legal challenge after lawmakers for the AfD party last month filed a complaint against the ECB’s Pandemic Emergency Purchase Program (PEPP), claiming that the scheme exceeds the ECB’s mandate.

The 1.35 trillion PEPP was launched earlier this year at the height of the coronavirus crisis to keep borrowing costs down and prevent the pandemic from morphing into a sovereign debt crisis.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Category Latest Posts