June 9, 2013 / 1:00 PM / 7 years ago

ECB says bond-buying program is unlimited

BERLIN (Reuters) - There is no limit to the European Central Bank’s (ECB) bond-buying program, a spokesman for the bank said on Sunday, denying a German newspaper report published in the run-up to a court hearing on the scheme.

An illuminated euro sign is seen in front of the headquarters of the European Central Bank (ECB) in the late evening in Frankfurt January 8, 2013. REUTERS/Kai Pfaffenbach

Frankfurter Allgemeine Sonntagszeitung on Sunday cited central bank sources as saying the ECB had set a limit of 524 billion euros on the Outright Monetary Transactions (OMT) scheme.

The bank had also had informed Germany’s constitutional court - which will weigh the OMT’s legality on Tuesday and Wednesday - of that limit, it said.

“The report is incorrect,” an ECB spokesman told Reuters.

“As indicated on various occasions, there are no ex-ante limits on the amount of Outright Monetary Transactions. Their size would be adequate to meet their objectives.”

Germany’s top court will consider whether the OMT infringes the constitution’s insistence on sovereign parliamentary control over budget matters.

No ruling is expected until after national elections in September, and legal experts say the court may for the first time defer to European judges in the euro zone crisis.

The ECB launched the potentially unlimited bond-buying program last September to combat the euro zone crisis by helping to cut struggling euro zone countries’ borrowing costs. Even though the scheme has yet to be activated, it has largely succeeded in doing that.

ECB Executive Board Member Joerg Asmussen said the hearing would offer “a good opportunity to explain the OMT again,” according to an extract from an article due to be published in Bild newspaper on Monday.

He was quoted as saying the OMT was “economically necessary, legally permissible and effective.”

Reporting by Michelle Martin and Sakari Suoninen; Editing by John Stonestreet

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