BERLIN (Reuters) - German parliamentarians should be involved in closer supervision of the European Central Bank after Tuesday’s ruling by Germany’s highest court, which gave the ECB three months to justify its stimulus scheme, liberal lawmaker Florian Toncar said.
Toncar, a member of the opposition Free Democrats (FDP) who sits on the finance committee of the Bundestag lower house of parliament, said he could imagine a special Bundestag committee charged with ECB supervision.
“The mandate and governance of the ECB belong on the agenda of European heads of government and the German EU Council presidency,” Toncar told Reuters.
Germany takes over the rotating six-month presidency of the European Union in the second half of this year.
Toncar’s view is significant as, in their ruling on Tuesday, judges at the Constitutional Court called on the German parliament and government to challenge the ECB, the central bank for the 19-country euro zone which includes Germany.
That means the matter must now be settled between the ECB, whose headquarters are in Frankfurt, and Berlin.
The verdict deals a blow to the unprecedented 2 trillion euro asset purchase scheme that kept the euro zone in one piece during its debt crisis but which critics say has flooded markets with cheap money and encouraged some governments to overspend.
Toncar called for voting at the ECB according to capital shares, the separation of monetary and fiscal policy, a large credit exposure ceiling to limit bond purchases and stricter conditions for emergency liquidity assistance (ELA) to banks.
He did not believe these demands affected ECB independence.
“The more independent an institution is, the more clearly its mandate and its set of instruments must be defined in order to prevent abuse of power,” Toncar said. “The limits of the mandate must be controlled by a body other than the ECB itself.”
It could not be right, he said, for parliaments and governments to decide against joint liability for the national debt of euro countries, “but that the ECB, without a democratic mandate to buy bonds through the back door, should achieve exactly that result”.
Reporting by Andreas Rinke; Writing by Paul Carrel; Editing by Catherine Evans