European Central Bank Has Defended Its Bond-Buying Program
The German government and central bank expressed their scepticism when the bond-buying program of the European Central Bank began in 2015. The group of eurosceptic politicians and academics from Germany brought the case claim the program violates a ban on monetary financing and make the Bundesbank, and with it the German taxpayer, liable for losses suffered by other national central banks under the program. It was referred to the Luxembourg-based General Court of the European Union by Germany's constitutional court last year.
As it became known today, the European Central Bank defended its 2.6 trillion-euro bond-buying program before the European Union's top court. The ECB said last month it expected to end its bond purchases at the end of the year, but it would keep reinvesting for a long time the cash it gets from bonds that mature.
The ECB aims to buy from investors, rather than directly from governments, and that risks for central banks were limited. Under the current scheme, only 20% of the bonds bought by Eurozone central banks are "risk-shared", meaning any loss from them would be spread across the Eurozone.