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Is ECB QE Illegal? Asking For Germany

"The Bundesbank may thus no longer participate..."

A top German court dealt the ECB's "Whatever it takes" mantra something of a legal setback on Tuesday, delivering an ultimatum in the process: Fix it within three months or the Bundesbank has to stop buying bonds under the program. "The Bundesbank may thus no longer participate in the implementation and execution of the ECB decisions at issue, unless the ECB Governing Council adopts a new decision that demonstrates... the PSPP (transactions) are not disproportionate to the economic and fiscal policy effects", the court said. At issue are purported risks to German state finances and the usual concerns about perpetuating zombie companies and endangering private savings. The court did say the asset purchases do not amount to direct government financing, though. For now, this is seen more as an irritant (and a particularly ill-timed one at that) than anything else, but it does open the door to a potentially perilous situation where the Bundesbank would become an active seller, although as part of "a long-term strategy coordinated with" other eurozone countries. Some analysts say it won't be difficult for the ECB to satisfy the judges' demands. "With its armada of specialists, it
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