This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2013/06/12/business/economy/german-court-weighs-bond-buying-by-european-central-bank.html
The article has changed 5 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Debate on the Euro’s Future in a German Courtroom | Debate on the Euro’s Future in a German Courtroom |
| (about 1 hour later) | |
| KARLSRUHE, Germany — Germany’s conflicted relationship with the euro was on full view at the country’s highest court here on Tuesday, with arguments portraying recent moves by the European Central Bank either as necessary stability measures or as an unconstitutional plan to transfer German wealth to Southern Europe. | KARLSRUHE, Germany — Germany’s conflicted relationship with the euro was on full view at the country’s highest court here on Tuesday, with arguments portraying recent moves by the European Central Bank either as necessary stability measures or as an unconstitutional plan to transfer German wealth to Southern Europe. |
| Technically, the Federal Constitutional Court was merely considering whether measures by the central bank to contain the euro crisis infringed on German law. But the oral arguments, on suits brought by numerous citizen groups, inevitably turned into a debate on the future of the euro currency project itself. | Technically, the Federal Constitutional Court was merely considering whether measures by the central bank to contain the euro crisis infringed on German law. But the oral arguments, on suits brought by numerous citizen groups, inevitably turned into a debate on the future of the euro currency project itself. |
| The star witnesses at the hearings were two friends and former classmates who symbolize German ambivalence about the common currency. | The star witnesses at the hearings were two friends and former classmates who symbolize German ambivalence about the common currency. |
| Jörg Asmussen, a member of the European Central Bank’s executive board, defended the bank’s promise last year to buy bonds in any quantity necessary to eliminate fears of euro zone breakup. Jens Weidmann, president of the German central bank, the Bundesbank, said the E.C.B. would violate European treaties if it bought bonds — which it has not yet had to do. | Jörg Asmussen, a member of the European Central Bank’s executive board, defended the bank’s promise last year to buy bonds in any quantity necessary to eliminate fears of euro zone breakup. Jens Weidmann, president of the German central bank, the Bundesbank, said the E.C.B. would violate European treaties if it bought bonds — which it has not yet had to do. |
| As the justices pointed out, the court does not have the power to block actions by the European Central Bank. But it might restrict participation by the German government or the Bundesbank in measures intended to address the crisis. As the euro zone’s paymaster, Germany plays a crucial role in any efforts to prop up the common currency. | |
| Some complainants clearly hoped for a ruling that would effectively force Germany to leave the euro. | Some complainants clearly hoped for a ruling that would effectively force Germany to leave the euro. |
| Karl Albrecht Schachtschneider, a retired law professor and well-known euro opponent, told the court he hoped that “the euro adventure will be brought to an end for the good of Germany and the good of Europe.” | Karl Albrecht Schachtschneider, a retired law professor and well-known euro opponent, told the court he hoped that “the euro adventure will be brought to an end for the good of Germany and the good of Europe.” |
| Others did not go that far, but argued that the E.C.B. had bypassed elected officials when it declared itself ready to buy bonds of euro zone members. | Others did not go that far, but argued that the E.C.B. had bypassed elected officials when it declared itself ready to buy bonds of euro zone members. |
| “The price of the so-called euro rescue may not be to injure democracy,” said Dietrich Murswiek. He argued before the court on behalf of Peter Gauweiler, a member of the German Parliament who is one of the individuals and political groups that have filed suits against the central bank’s crisis measures. | “The price of the so-called euro rescue may not be to injure democracy,” said Dietrich Murswiek. He argued before the court on behalf of Peter Gauweiler, a member of the German Parliament who is one of the individuals and political groups that have filed suits against the central bank’s crisis measures. |
| On the opposite side, Wolfgang Schäuble, the German finance minister, warned that the cost to Germany would be incalculable if the country left the currency union. And he pointed out that under the European Central Bank, inflation has been lower than it was with the deutsche mark. “The E.C.B. is acting within its mandate,” he told the court. | On the opposite side, Wolfgang Schäuble, the German finance minister, warned that the cost to Germany would be incalculable if the country left the currency union. And he pointed out that under the European Central Bank, inflation has been lower than it was with the deutsche mark. “The E.C.B. is acting within its mandate,” he told the court. |
| During his appearance before the court, Mr. Asmussen sought to assuage concerns that German taxpayers could be left with bill if the E.C.B. suffers losses from buying government bonds. Unlike a commercial bank, the European Central Bank can operate at a loss, he said. That would mean it would not need to ask governments for money to cover short-term losses. | During his appearance before the court, Mr. Asmussen sought to assuage concerns that German taxpayers could be left with bill if the E.C.B. suffers losses from buying government bonds. Unlike a commercial bank, the European Central Bank can operate at a loss, he said. That would mean it would not need to ask governments for money to cover short-term losses. |
| Answering accusations that the central bank is remote from the democratic process, Mr. Asmussen said its measures had given elected officials time they needed to deal with the crisis. | Answering accusations that the central bank is remote from the democratic process, Mr. Asmussen said its measures had given elected officials time they needed to deal with the crisis. |
| “The risk of not acting would have been greater,” he told the high court. | “The risk of not acting would have been greater,” he told the high court. |
| Mr. Weidmann, who studied economics at the University of Bonn with Mr. Asmussen, argued a point of view widely held in Germany: that the E.C.B. is making it too easy for struggling members of the euro zone to continue their wayward ways. | Mr. Weidmann, who studied economics at the University of Bonn with Mr. Asmussen, argued a point of view widely held in Germany: that the E.C.B. is making it too easy for struggling members of the euro zone to continue their wayward ways. |
| “Interest rates have a central disciplinary function,” Mr. Weidmann said. “Monetary policy can’t solve the problems of the euro zone. Only political leaders can solve the problems.” | “Interest rates have a central disciplinary function,” Mr. Weidmann said. “Monetary policy can’t solve the problems of the euro zone. Only political leaders can solve the problems.” |
| Both men are members of the European Central Bank governing council, which sets monetary policy. Mr. Weidmann is known to be the only member of the 23-member council who voted against the bond-buying program, which was announced in September. | Both men are members of the European Central Bank governing council, which sets monetary policy. Mr. Weidmann is known to be the only member of the 23-member council who voted against the bond-buying program, which was announced in September. |
| The discussion was largely theoretical. The European Central Bank has not needed to buy any bonds because the announcement alone was enough to keep speculators at bay and quiet talk of a euro zone breakup. | The discussion was largely theoretical. The European Central Bank has not needed to buy any bonds because the announcement alone was enough to keep speculators at bay and quiet talk of a euro zone breakup. |
| Some of the justices’ questions after the testimony Tuesday morning revolved around whether it was permissible to file a lawsuit to stop bond buying when no purchases had yet taken place. The questions suggested the court might rule on narrow grounds, arguing that at least some aspects of the complaints were premature. | Some of the justices’ questions after the testimony Tuesday morning revolved around whether it was permissible to file a lawsuit to stop bond buying when no purchases had yet taken place. The questions suggested the court might rule on narrow grounds, arguing that at least some aspects of the complaints were premature. |
| The objections raised by the opponents of European Central Bank action tended to follow a similar set of themes. The central bank’s policies, opponents said, will evolve into a means to transfer German wealth to Greece, Italy and other European Union countries against the will of the German people. Gregor Gysi, a member of Parliament who spoke on behalf of the German Left Party, said E.C.B. action benefited big investors without solving the problems like high unemployment rates among youths and rightist extremism. | The objections raised by the opponents of European Central Bank action tended to follow a similar set of themes. The central bank’s policies, opponents said, will evolve into a means to transfer German wealth to Greece, Italy and other European Union countries against the will of the German people. Gregor Gysi, a member of Parliament who spoke on behalf of the German Left Party, said E.C.B. action benefited big investors without solving the problems like high unemployment rates among youths and rightist extremism. |
| The chief judge in the hearing said it was irrelevant whether the central bank measures had been successful. “Otherwise the ends would justify the means,” Andreas Vosskuhle, president of the eight-judge panel that will decide the case, said in an opening statement Tuesday morning. | The chief judge in the hearing said it was irrelevant whether the central bank measures had been successful. “Otherwise the ends would justify the means,” Andreas Vosskuhle, president of the eight-judge panel that will decide the case, said in an opening statement Tuesday morning. |
| Mr. Vosskuhle acknowledged that the case presented the court with extremely difficult legal issues. The German court, Mr. Vosskuhle said, does not have the power to rule on the actions of the European Central Bank, which answers solely to European Union law. The issue, he said, is whether the central bank has taken on duties that, according to the German Constitution, rightfully belong to the country and may not be transferred. | Mr. Vosskuhle acknowledged that the case presented the court with extremely difficult legal issues. The German court, Mr. Vosskuhle said, does not have the power to rule on the actions of the European Central Bank, which answers solely to European Union law. The issue, he said, is whether the central bank has taken on duties that, according to the German Constitution, rightfully belong to the country and may not be transferred. |