Germany and the Euro: The Ja and Nein of Euro Rescues

THE two German central bankers, both 40-somethings and friends since university days, pointedly sat next to each other in the courtroom on June 11th. Jens Weidmann has risen through the office of Chancellor Angela Merkel to become president of the Bundesbank. Jörg Asmussen has moved via the finance ministry to the executive board of the European Central Bank (ECB). But however amicable, they came to the constitutional court in Karlsruhe on opposing sides of the argument.At issue was, once again, the effort to end the euro crisis. In September the court gave a preliminary nod to the European Stability Mechanism, a fund that can lend to struggling euro-zone countries on certain conditions. But out of that judgment grew a possibly more perilous case over the role of the ECB.The ECB’s president, Mario Draghi, promised last summer to do “whatever it takes” to save the euro. His tool was a programme to buy, without limit, the bonds of troubled euro-zone countries. These purchases would only be in the secondary markets, but would clearly keep yields down. The ECB has not so far bought a single bond under this programme. But its readiness to do so has calmed markets.The German plaintiffs in Karlsruhe argue that this programme violates the ECB’s mandate. It fell to Mr Weidmann to argue their case. The central bank is supposed to make only monetary policy. Buying government bonds, he…

The Economist: Europe