The Bundesbank confirmed as genuine on Friday a leaked report prepared for Germany’s Constitutional Court that criticises the European Central Bank’s plan to buy the debt of highly indebted states.
The 29-page report, dated December 21, was published by German newspaper Handelsblatt. In it, the German central bank warned that the purchase of stressed countries’ sovereign debt could “compromise the independence of the central bank” and could be difficult to stop.
Bundesbank President Jens Weidmann, who has criticised the ECB’s Outright Monetary Transactions programme several times, will travel to Karlsruhe for Constitutional Court hearings on June 11-12, the Bundesbank confirmed.
The OMT programme, a cornerstone of the policy response that has helped ease the euro zone’s debt crisis, was unveiled in September, but has not been activated yet.
Weidmann appeared at the court last year when it said that ECB bond-buying on the secondary market is prohibited if it aims “at financing members’ budgets independently of capital markets”, as this would circumvent the prohibition of monetary financing.
Some German legal experts saw this as a veiled threat to the ECB.
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