The much-awaited German court ruling on the European Central Bank (ECB) Quantitative Easing (QE) program is out, with the judges reaching a 7-1 ruling in the case.
The court said that some action by the ECB QE program partially violates the constitution and that some of the action is held illegal i.e. not valid in Germany.
The top court, further, said that the ECB decisions are not backed by the European Union (EU) Treaty.
Additional takeaways
ECB's bond purchase scheme partially violates constitution.
Did not find ECB’s Public Sector Purchase Program (PSPP) to be in violation of the prohibition of monetary financing of member state budgets.
Decision on PSPP published today does not concern any financial assistance measures taken by the EU or the ECB in the context of the current coronavirus crisis.
Gives ECB three months to adopt its policy.
The ruling opens the door to a large potential increase in ECB bond purchases in its efforts to counterbalance the economic downside of the coronavirus pandemic.
Market reaction
The shared currency popped on the ruling, driving EUR/USD to a fresh daily high of 1.0925 before sharply reversing to around 1.0900, where is now wavers. The spot is almost unchanged on the day.
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