The European Central Bank can buy just over one year's worth of German bond...
FRANKFURT - The European Central Bank can buy just over one year’s worth of German bonds under its new asset-purchase program and must bend its own rules to keep the scheme running longer, risking fresh internal and legal conflict, two sources familiar with the process said.
Opponents of the purchases — the central bank chiefs of the euro zone’s biggest countries, France and Germany, among others — argued that the purchases should have been an emergency tool. Indefinite buying could conflict with the safeguards the ECB set up to keep it legal, they said. To delay hitting this wall, policymakers would prefer “bending” the capital key and buying fewer German bonds rather than changing the issuer limit, two other sources, with direct knowledge said.
The ECB’s holdings of Italian, Spanish and French debt are currently 8.4%, 7.4% and 3.9% above their quotas, according to Reuters calculations, which exclude Greece because it is not eligible for purchases. So it will take time for the new government bond purchases, which are likely to be in the region of 15 billion euros a month if history is anything to go by, to affect the total in a material way.
Indeed, the German complainants, headed by the Berlin professor Markus Kerber, also indicated that the new bond purchase change the nature of the program, so courts should have a fresh look.
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