Chronic. The evidence is there, visible to all: the European Central Bank (ECB) does not respect the spirit of the European treaties. Since 2015, and even more since the pandemic, it has bought thousands of billions of euros in debt from eurozone states, of which it now owns more than 20%.
However, article 123 of the Treaty on the Functioning of the European Union is clear: "The direct acquisition by the European Central Bank, or national central banks, of debt instruments (States) East (…) prohibited. " To get around the problem, the ECB modestly covered itself with a legal fig leaf. She doesn't buy "Directly" government debt, but it does it in secondary markets. The subterfuge is light: it often happens that the purchase of government bonds is made less than two weeks after they are put on the market. "Economically, it's the same thing", says a former central banker.
Legally, the ploy was enough. In 2018, the European Court of Justice ruled that the ECB's action was legal. On May 5, the judges of the German Constitutional Court, while showing their annoyance, also accepted this interpretation of the law. Their judgment recognized that there was no violation of the treaty, even though he questioned the "Proportionality" of the ECB’s action, that is, whether the ECB has sufficiently taken into account the negative consequences of its action.
Purists versus unemployed and savers
All of this is obvious hypocrisy. And that's good. For once that a European institution does the job, and acts decisively, let's take advantage of it. In 2015, its action undoubtedly avoided the break-up of the euro zone. It has filled the sidereal void left by governments.
Legal purists may have welcomed more respect for the treaty. The unemployed and savers who would have been ruined by his inaction probably less. This year, the ECB's late start-up to the start of the pandemic sparked a start of panic in the markets, providing a glimpse of what would happen if the central bank stood idly by.
None of this means that the ECB's action is above criticism. Couldn't the 2,500 billion euros injected into the financial system since 2015 have been better spent? Stock markets and property markets benefited, but household purchasing power stagnated. Shouldn't this money have gone directly to households? Or use it to do "green" stimulus? There are many proposals for "helicopter money" of this kind, sometimes fanciful, sometimes interesting.
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