BERLIN (Reuters) – Germany’s parliament should legally oblige the country’s central bank to inform it about its activities as a member of the system of euro zone central banks, a legal analysis by the parliament’s research service showed.
The confidential analysis, seen by Reuters, was prepared in response to Tuesday’s finding by Germany’s top court that the European Central Bank had not done enough to justify years of emergency bond-buying.
The Constitutional Court ruled that the ECB must prove within three months that its purchases of government bonds worth 2 trillion euros ($2.2 trillion) are proportional, or the Bundesbank will have to leave the stimulus scheme.
The ruling created a dilemma for the ECB, whose credibility as the independent central bank for the entire euro zone could be weakened by the impression that it was answering directly to the top court of the bloc’s largest member.
The paper suggested the solution could lie in parliament creating a new obligation on the Bundesbank to inform it on a regular basis about its activities as a member of the system of euro zone central banks.
“It is worth considering legally enshrining a right of the German Parliament to be informed by the Bundesbank of its activities as a member of the European System of Central Banks while preserving the independence of the ECB,” the paper says.
The proposal echoes suggestions by sources with direct knowledge of policymakers’ thinking, who told Reuters that the Bundesbank would need to take the lead in justifying the measures or risk giving the impression that the ECB needed German permission to act.
The paper added that it expected few immediate economic consequences from the ruling, noting that sovereign bond markets had shown themselves “so far unimpressed”.
(Reporting by Andreas Rinke; Writing by Thomas Escritt; Editing by Hugh Lawson)
