BERLIN (Reuters) – The European Central Bank has honoured the principle of proportionality with its flagship stimulus programme, German Finance Minister Olaf Scholz said in a letter to the president of Germany’s lower house of parliament.
The development, responding to a shock ruling by Germany’s top court last month, lifts uncertainty about the stimulus plan the ECB introduced in 2015 as well as about the bank’s independence and the euro’s future.
The Constitutional Court last month gave the ECB three months to justify bond purchases under the stimulus plan — the Public Sector Purchase Programme (PSPP) — or lose the Bundesbank as a participant.
In the June 26 letter, a copy of which was seen by Reuters, Scholz wrote: “The federal finance ministry is convinced the ECB Governing Council … has shown plausible proportionality with regard to the PSPP,” Scholz wrote.
Losing the Bundesbank, the biggest of the 19 national euro zone central banks, as a participant in the PSPP programme would have raised questions about the future of the single currency.
In his letter, Scholz said his ministry had held numerous talks with the ECB and the Bundesbank in recent weeks, and concluded: “In our view, the Bundesbank is allowed to participate in the implementation and execution of the disputed PSPP resolutions in the future.”
(Writing by Paul Carrel; Editing by Maria Sheahan and Catherine Evans)