Germany, the Finance Ministry: ECB demonstrated the proportionality of the programme of incentives

29.06.2020 18:59
The European Central Bank has demonstrated that its flagship stimulus program is proportional, German Finance Minister Olaf Scholz wrote in a letter to the President of the country's lower house of Parliament.
The German constitutional court in may ruled that the ECB exceeded its authority by buying up 2 trillion euros of public debt over the past five years, and gave the Central Bank three months to prove that the program is necessary and “proportionate.”
Otherwise, the Bundesbank must stop participating in the scheme.
In a letter dated June 26, Scholz said “ " the Federal Ministry of Finance is convinced that the ECB's Board of governors... has demonstrated convincing proportionality with regard to the (asset purchase program) PSPP.”
Losing the Bundesbank, the largest of the 19 national Central banks in the Euro zone, as a participant in the program would put the future of the single currency in question.
Scholz said in a letter that the Finance Ministry has held several rounds of talks with the ECB and Bundesbank in recent weeks.
“In our opinion, the Bundesbank may participate in the implementation and enforcement of disputed PSPP decisions in the future,” the letter says.

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