Technically, the Federal Constitutional Court was merely considering whether measures by the central bank to contain the euro crisis infringed on German law. But the oral arguments, on suits brought by numerous citizen groups, inevitably turned into a debate on the future of the euro currency project itself.
The star witnesses at the hearings were two friends and former classmates who symbolize German ambivalence about the common currency.
Jörg Asmussen, a member of the European Central Bank’s executive board, defended the bank’s promise last year to buy bonds in any quantity necessary to eliminate fears of euro zone breakup.
Jens Weidmann, president of the German central bank, the Bundesbank, said the E.C.B. would violate European treaties if it bought bonds — which it has not yet had to do.
As the justices pointed out, the court does not have the power to block actions by the European Central Bank. But it might restrict participation by the German government or the Bundesbank in measures designed to address the crisis. As the euro zone’s paymaster, Germany plays a crucial role in any efforts to prop up the common currency.
Some complainants clearly hoped for a ruling that would effectively force Germany to leave the euro.
Karl Albrecht Schachtschneider, a retired law professor and well-known euro opponent, told the court he hoped that “the euro adventure will be brought to an end for the good of Germany and the good of Europe.”
Others did not go that far, but argued that the E.C.B. had bypassed elected officials when it declared itself ready to buy bonds of euro zone members.
“The price of the so-called euro rescue may not be to injure democracy,” said Dietrich Murswiek. He argued before the court on behalf of Peter Gauweiler, a member of the German Parliament who is one of the individuals and political groups that have filed suits against the central bank’s crisis measures.
On the opposite side, Wolfgang Schäuble, the German finance minister, warned that the cost to Germany would be incalculable if the country left the currency union. And he pointed out that under the European Central Bank, inflation has been lower than it was with the deutsche mark. “The E.C.B. is acting within its mandate,” he told the court.
Mr. Schäuble said the central bank could be put into an impossible position if it were faced with conflicting rulings by courts in different euro zone countries.
The hearing, in a fenced-off court and police complex in a wooded area outside Karlsruhe, a city in southwest Germany near the border with France, drew an eclectic group of Germans on both the left and right who deride the euro as a travesty and long to bring back the deutsche mark. Outside a security checkpoint, several dozen anti-euro protesters chanted and waved signs as witnesses and media arrived in the morning. One sign called for Mr. Asmussen, the central bank’s board member, to be thrown in jail, an indication of the emotion that some Germans attach to the issue.
During his appearance before the court, Mr. Asmussen sought to assuage concerns that German taxpayers could be left with bill if the E.C.B. suffers losses from buying government bonds. Unlike a commercial bank, the European Central Bank can operate at a loss, he said. That would mean it would not need to ask governments for money to cover short-term losses.
Answering accusations that the central bank is remote from the democratic process, Mr. Asmussen said its measures had in fact given elected officials time they needed to deal with the crisis.
“The risk of not acting would have been greater,” he told the high court.
Mr. Weidmann, who studied economics at the University of Bonn with Mr. Asmussen, argued a point of view widely held in Germany: that the E.C.B. is making it too easy for struggling members of the euro zone to continue their wayward ways.
“Interest rates have a central disciplinary function,” Mr. Weidmann said. “Monetary policy can’t solve the problems of the euro zone. Only political leaders can solve the problems.”
Article source: http://www.nytimes.com/2013/06/12/business/economy/german-court-weighs-bond-buying-by-european-central-bank.html?partner=rss&emc=rss
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