FRANKFURT, Oct 4 (Reuters) - The European Union’s top court should back the European Central Bank’s bond-buying programme against a group of German complainants seeking to block it on legal grounds, the court’s adviser on the case said on Thursday.
The programme is set to end at the end of the year in any case, but the court’s ruling will set a key precedent for future ECB policy decisions.
Advocate general Melchior Wathelet rejected complainant arguments that the ECB’s 2 trillion-euro ($2.30 trillion) purchases of government bonds had bankrolled indebted governments and distorted financial markets.
The purchases, a cornerstone of the ECB’s efforts that have revived inflation and growth in the euro zone, has often been criticised in Germany for inflating bond prices and endangering taxpayer money.
“The programme does not infringe the prohibition of monetary financing and does not exceed the powers of the ECB,” Wathelet said in his opinion to the court.
The advocate’s opinions are not binding, but the court generally follows them.
Wathelet emphasised, among other factors, that the risks associated with the purchases were only partly shared across countries and that the ECB retained the power to stop them at any time, meaning they did not represent a guaranteed source of funding for governments.
The European Court of Justice had been asked by Germany’s constitutional court to provide a preliminary ruling on whether the ECB’s bond purchases broke EU law.
Once that ruling is out, the case will go back to the German court in Karlsruhe, where the group of conservative German academics and politicians brought the original case. ($1 = 0.8695 euros) (Reporting By Francesco Canepa; editing by John Stonestreet, Larry King)