Kronberger Kreis criticizes the signals triggered by the OMT judgment of the European Court of Justice

Before the Federal Constitutional Court is reopening the hearings regarding the OMT program of the European Central Bank (ECB), the six economists forming the Kronberg Circle have warned in a new study of eroding the limits of the ECB’s mandate.

“The prohibition of monetary financing will be fundamentally weakened in its significance for the Economic and Monetary Union”, Volker Wieland said.

In June 2015, the European Court of Justice (ECJ) gave final approval to the ECB's Outright Monetary Transactions (OMT) bond buying program, judging it was falling under the ECB’s responsibility and it was not violating the prohibition of monetary financing. On February 16, 2016, the Federal Constitutional Court is reopening the hearing.

In an interdisciplinary study, the Kronberger Kreis, formed in 1982 as the scientific council of the Stiftung Marktwirtschaft, points out that the ECJ’s approval means an erosion of the limits of the ECB’s mandate. If the Federal Constitutional Court followed the ECJ without any reservation, the ECB’s Governing Council could justify far-reaching interventions in areas of economic and financial policies.

In its analysis, the Kronberger Kreis also refers to the findings of the IMFS study"The ECB's Outright Monetary Transactions in the Courts".

The Kronberg Circle was founded in 1982 and is the Scientific Advisory Council of the Marktwirtschaft Foundation. Current members of the Kronberg Circle are Professor Lars P. Feld, Professor Clemens Fuest, Professor Justus Haucap, Professor Heike Schweizer, Professor Volker Wieland, and Professor Berthold U. Wigger.


Press release of the Kronberg Circle (PDF)
Kronberg Circle Study 61: "Dismantling the Boundaries of the ECB's Monetary Policy Mandate" (PDF)
IMFS Interdisciplinary Studies in Monetary and Financial Stability 2015/1 "The ECB's Outright Monetary Transactions in the Courts" (PDF)

Media articles:
Reuters: "Experten kritisieren EU-Richterspruch zur Euro-Rettungspolitik"
Reuters: "German economists stoke legal showdown with ECB"
dpa-AFX: "Karlsruhe muss Signal gegen ausufernden EZB-Kurs senden"
Wallstreet online: "Ökonomen kritisieren das 'entgrenzte Mandat der EZB'"
Börsen-Zeitung: "Ökonomen fordern Doppelbeschluss"

More articles:
Op-ed piece by Volker Wieland on OMT hearing