ECB wins court fight over legality of quantitative easing programme
The ECB has accumulated €2.6tn in assets since the programme started in March 2015
The headquarters of the European Central Bank (ECB) are seen in the early evening in Frankfurt, Germany
The European Central Bank didn’t overstep its mandate by setting up a quantitative easing (QE) programme to stave off deflation, judges at the European Union’s top court ruled.
The ECB’s programme “for the purchase of government bonds on secondary markets does not infringe EU law,” the EU Court of Justice said, dismissing the latest in a series of challenges from critics who argue the tool deployed by ECB president Mario Draghi clashes with a ban on so-called monetary financing.
“It does not exceed the ECB’s mandate and does not contravene the prohibition of monetary financing,” the court added, in its binding decision on Tuesday in Luxembourg.
The ruling clears the way for the Governing Council to keep its stimulus in place and support euro-area economy amid flagging growth momentum. While the Governing Council is expected on Thursday to decide that net asset purchases will cease at the end of December, policy makers have planned to reinvest proceeds from maturing bonds for an extended period of time afterwards.
The ECB has accumulated €2.6 trillion in assets since the programme started in March 2015.