Peter Gauweiler et al. v. Deutscher Bundestag

The European System of Central Banks (ESCB) consisted of the European Central Bank (ECB) and the central banks of the Euro area (i.e., European Union [EU] member states that adopted the euro as the states’ currency). On September 6, 2012, the ECB decided to purchase government bonds on the secondary markets for bond trading to provide the governments from which the ECB purchased bonds with liquidity to pay debts. The decision was made based on economic analysis showing that the interest rates on government bonds from some EU states were highly volatile because of excessive premiums on the bonds to guard against the risk of the breakup of the Euro area. The ECB determined that bond-interest volatility fragmented bank-refinancing conditions and credit costs across the Euro area, limiting the effect of economic impulses transmitted by the ESCB. The decision to purchase bonds was taken to rectify this disruption in the monetary policy transmission mechanism. In the press release announcing the bond-purchase program, the ESCB stated that the program would only permit the purchase of government bonds as necessary to achieve the program’s objectives and would cease when the objectives were met. A question was referred to the European Union Court of Justice as to whether the decision to purchase government bonds in secondary bond markets was within the power granted to the ESCB under EU law.