|Author (Corporate)||Cardiff EDC|
Judgment from the Court of Justice of the European Union (CJEU) regarding the validity of the European Central Bank's programme for the purchase of government bonds on secondary markets (PSPP programme) in light of EU law.
In view of a number of factors that increased the risk of a medium-term decline in prices in the context of an economic crisis entailing a risk of deflation, the European Central Bank (ECB) adopted in March 2015 a programme for the purchase of government bonds on secondary markets - the PSPP programme.
A number of individuals brought actions before the German Federal Constitutional Court, following an understanding that such ECB programme and subsequent extensions go beyond the powers of the institution by violating a ban on it funding governments. The German court requested a preliminary ruling from the CJEU, which received questions in August 2017 concerning the validity of the PSPP programme in light of EU law.
On 11 December 2018, the CJEU argued that the consideration of the referred questions did not include any factor that would be able to affect the validity of the PSPP programme. The Court found that the Quantative Easing (QE) programme does not exceed the ECB's mandate as it falls within the area of monetary policy. It also concludes that the PSPP programme does not infringe the prohibition of monetary financing.
|Subject Categories||Economic and Financial Affairs, Law|
|Subject Tags||Court of Justice of the European Union [CJEU], Monetary Affairs|
|Keywords||CJEU Judgments, Quantitative Easing [QE]
|Countries / Regions||Germany|
|International Organisations||European Union [EU]|