News Column

Economist Cautions German Court on ECB Policies

June 12, 2013

A leading German economist, Hans-Werner Sinn, told a German court Wednesday that the European Central Bank's policy of buying government bonds to defend the euro risked creating more debt.

It will take the German Constitutional Court weeks or months to issue a decision on claims that the ECB's Outright Monetary Transactions (OMT) programme, which foresees the theoretically unlimited purchase of eurozone government bonds, breaches the German constitution.

At the hearing in the city of Karlsruhe, Sinn contended that the OMT could end up encouraging fiscal laxness among the weakest members of the currency bloc.

"All this rescuing activity is extremely dangerous," he said.

Politicians on both the left and right have brought the case to Germany's highest court. The first hearing took place on Tuesday.

The German member of the ECB's executive board, Joerg Asmussen, has already appeared in court to defend the central bank's policies.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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