An emergency measure that was credited with stabilising the euro has been referred to Europe’s top court.
On Friday, Germany’s constitutional court said that the European Central Bank’s (ECB) bond-buying scheme could be “incompatible” with EU law.
The European Court of Justice will now decide the legality of the so-called debt “backstop”, introduced in 2012.
Although the ECB has not used the emergency power, its existence calmed turmoil in European financial markets.
When he announced the Outright Monetary Transactions (OMT) programme, ECB President Mario Draghi said he would do “whatever it takes” to save the single currency.
But the German court has said there was good reason to think the OMT violated a ban on the bank funding governments.
In a statement, the court added: “There are important reasons to assume that it exceeds the European Central Bank’s monetary policy mandate and thus infringes the powers of the member states.”
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