Lagarde: Bundesbank must continue participating in ECB bond-buying

Frankfurt - Germany's central bank, the Bundesbank, must continue participating in bond-buying for the European Central Bank, despite a constitutional court ruling critical of the stimulus programme, ECB President Christine Lagarde told the media.

"All national central banks should fully participate in the determination and implementation of monetary policy in the euro area," Lagarde said in an interview late Monday with various European newspapers, including Germany's Handelsblatt.
"Each national central bank in the euro area is independent and cannot take instructions from governments," she added.
With a stake of just over 26 per cent, the Bundesbank is the largest shareholder in the central bank for the 19-member eurozone.
The ECB's main goal is to maintain balanced prices across the currency bloc, with targeted inflation of just below 2 per cent. By buying government bonds, the Frankfurt-based central bank seeks to boost inflation.
However, the top German court ruled on May 5 that the ECB's multibillion-euro asset purchases were lacking national oversight.
The Constitutional Court in the western city of Karlsruhe gave the German government three months to create a framework for reviewing the ECB's bond-buying activities.
The ruling was the first time that Germany went against a decision by the European Court of Justice.
"The ECB was given a mandate by the EU member states when the treaty was drafted and ratified. The ECB is subject to the jurisdiction of the Court of Justice of the European Union. We will continue to be accountable to the European Parliament and to explain our decisions to European citizens," Lagarde said.


Tuesday, May 19th 2020

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