Is QE beyond the ECB’s legal mandate?

Author: Danielle Myles | Published: 25 Nov 2015

A German lawsuit alleging the European Central Bank’s (ECB) bond-buying programme exceeds its mandate has merit, according to banking lawyers. But courts are not likely to side with the complainant for fear of disrupting the eurosystem.

The claim lodged by former politician Peter Gauweiler last month argues that the ECB’s €1.1 trillion ($1.2 trillion) quantitative easing programme involves state financing and economic policy – not simply monetary policy.   

It comes as speculation mounts that the eurozone central bank will next month expand the size, composition or duration  of its government bond-buying programme.

As with all member states, there are conditions attached to Germany’s transfer of sovereign powers to organs of the EU; including a prohibition on the ECB’s engagement in economic policy. At the crux of the lawsuit is whether the Bank’s activities are confined to the area of monetary stability, or involve something...