German Citizens Sue to Prevent ECB Bond Buying

November 16, 2012 at 11:13 AM

Share & Print

A group of German citizens has filed suit to stop the European Central Bank from buying bonds to help lower interest rates for countries saddled with debt.

Bloomberg reported Friday that the lawsuit was filed on Nov. 12 with the European Union General Court, the second-highest judicial body in the EU to block the Outright Monetary Transactions program.

The group is currently made up of 5,217 plaintiffs and is led by activist group Zivile Koalition e.V. Beatrix von Storch, the group's spokeswoman, said in a statement, "The ECB's policy violates its own statutes and has an immediate influence on monetary stability in the euro area."

This is the sixth case to reach the EU's two top courts in challenges to decisions made by the Frankfurt-based ECB on eurozone issues. Earlier in the year, a group of more than 200 Italian retail investors sued to reverse a decision by the ECB that they said allowed the central bank to avoid Greek debt losses that private bondholders had to accept during a restructuring.

Other cases include a suit brought by Bloomberg News before the General Court to compel the ECB to release files showing how Greece may have used derivatives to hide its borrowings, and two cases brought by the ECB that are pending at the lower EU court regarding plans to block trades in some euro-denominated securities from being cleared outside the euro area.

The sixth suit, which is being appealed to the top EU court, the Court of Justice, is aimed at annulling the ECB's decisions to buy eurozone government debt and accept Greek, Irish and Portuguese debt from banks as collateral.

NOT FOR REPRINT