Bundesbank can continue to buy bonds for time being - Scholz

FILE PHOTO: German Finance Minister and Vice-Chancellor Olaf Scholz attends a session at the lower house of parliament, Bundestag, as the spread of the coronavirus disease (COVID-19) continues, in Berlin, Germany, April 23, 2020. REUTERS/Axel Schmidt

BERLIN (Reuters) - The ruling by Germany’s top court on the European Central Bank’s bond-buying programme allows the bank to make such purchases in principle and the Bundesbank can continue to take part for now, German Finance Minister Olaf Scholz said on Tuesday.

The constitutional court in Karlsruhe ruled on Tuesday that the German central bank would have to stop buying government bonds under the ECB’s long-running stimulus scheme within three months unless it can prove purchases are needed.

“The court clearly ruled that the European Central Bank’s bond-buying programme is not monetary financing of states,” Scholz told reporters, adding that the programme was in line with Germany’s constitution in this regard.

Scholz said the court’s three-month ultimatum for the ECB to explain the proportionality of its scheme was “quite a long time period”, adding that Germany’s central bank would be able to keep participating for the time being.

“What’s important to me is that solidarity in the European Monetary Union is not put into question,” Scholz said.

“Especially in these days in which we’re all challenged so much by the corona crisis, the joint currency and the joint monetary policy are giving us the needed solidarity in Europe.”

The ruling also shows that member states have to deepen and intensify European cooperation, Scholz added.

Asked if now was the time for Berlin to embrace a joint European fiscal policy, Scholz pointed to a 500 billion euros ($543 billion) rescue package agreed by euro zone member states last month and plans for a post-crisis recovery fund for the bloc.

“We’ll find ways to guarantee that the things that need to happen in Europe can also happen in the future. For this, the constitutional court has given a clear line - and by the way also a lot of time,” Scholz said.

Reporting by Michael Nienaber; Editing by Michelle Martin and Andrew Cawthorne