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Germany rebuffs EU legal move against Germany over ECB ruling

BERLIN (Reuters) - The German government has rejected legal steps brought against it by the European Commission after the country’s top court made a ruling on the European Central Bank’s bond-buying programme that was at odds with a judgement by the EU’s own top court.

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo/File Photo

The Commission action reflects concern that the German ruling could undermine European Union law especially in places where the rule of law is already weakened - as in nationalist-ruled Poland and Hungary, both now under EU investigation.

The legal step against Germany taken by the Commission in June is aimed at compelling Berlin to acknowledge the primacy of EU law over national court decisions.

It was triggered by a ruling by Germany’s Constitutional Court in May 2020 which said the ECB had overstepped its mandate with bond purchases even though the European Court of Justice (ECJ) had already given the green light for the scheme. .

Germany, which is cool to ECB bond-buying with critics saying it risks exposing taxpayers to potential losses, had two months to respond to the action.

In a letter to the Commission, seen by Reuters on Tuesday, the government set out its arguments, saying the case was unfounded and that its courts acted in accordance with EU law.

“Just like the European Treaties, (Germany’s) Basic Law obliges all German constitutional bodies to exercise their remits in a way that is compatible with European law and in accordance with the Union treaties,” said the letter.

In addition, the government suggested setting up a dialogue between the ECJ and EU member states’ constitutional courts to promote understanding within Europe.

The Commission will have to decide how to respond to the arguments put by the German government.

The business daily Handelsblatt first reported the contents of the letter.

In taking legal action against Germany, the Commission took a view that Berlin had violated the principles of autonomy, primacy, effectiveness and uniform application of EU law.

Reporting by Chrisitan Kraemer and Frank Siebelt; Writing by Madeline Chambers; Editing by Mark Heinrich