Bloomberg "Anywhere" Remote Login Bloomberg "Terminal" Request a Demo

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

German Judges Reject Monti Bid for Rescue-Fund Bank License

Sept. 12 (Bloomberg) -- Germany’s highest court repudiated Italy’s push to grant the permanent euro-area rescue fund a banking license, saying it would violate the European Union’s basic law.

In upholding the 500 billion-euro ($646 billion) European Stability Mechanism, Germany’s Federal Constitutional Court in Karlsruhe today disputed the fund’s ability to borrow from the central bank, a move advocated by Italian Prime Minister Mario Monti.

“Borrowing by the ESM from the European Central Bank, alone or in connection with the depositing of government bonds, would be incompatible with the prohibition of monetary financing entrenched” in EU treaties, the court said. It “can only be taken to mean that it does not permit such borrowing operations.”

That finding marked a victory for German Chancellor Angela Merkel and her allies in Finland and the Netherlands, who have opposed allowing the ESM to expand its power by tapping central bank funds. Merkel and Monti clashed at a joint press conference on Aug. 29 over the matter.

“Some things that aren’t possible today under current conditions could become possible tomorrow,” Monti said to reporters after Merkel, at his side, ruled out a banking license for the ESM. “If there isn’t consensus for a certain instrument, alternative instruments can be found.”

To contact the reporter on this story: James Hertling in Paris at jhertling@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.