Wednesday, August 24, 2011

German President Questions Legality of ECB Bond Purchases

August 24, 2011

German President Christian Wulff blasted the European Central Bank's policy of buying up bonds from indebted euro-zone countries on Wednesday, saying it runs counter to European Union laws. His comments highlight just how controversial efforts at propping up the common currency have become.

German President Christian Wulff on Wednesday publicly questioned the legality of the European Central Bank's program of buying bonds of debt-ridden EU countries as a way of propping up their economies.

Speaking at a conference of economists in the Bavarian town of Lindau, Wulff said: "I regard the massive acquisition of the bonds of individual states via the European Central Bank as legally questionable."

He referred to an article in the EU's fundamental treaty which bars the ECB from buying bonds directly from governments. Because of the article, the ECB has been purchasing bonds on the secondary market. The ban, Wulff said, "only makes sense if those responsible don't circumvent it with comprehensive purchases on the secondary market."


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