Legal, compliant and suitable: The ECB‘s Pandemic Emergency Purchase Programme (PEPP).BertelsmannStiftung/jacques Delors Centre Policy Brief 25 March 2020

Grund, Sebastian (2020) Legal, compliant and suitable: The ECB‘s Pandemic Emergency Purchase Programme (PEPP).BertelsmannStiftung/jacques Delors Centre Policy Brief 25 March 2020. [Working Paper]

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Abstract

The ECB has announced a 750-billion-euro purchase programme to fight the economic impact of the COVID-19 pandemic. But like all ECB programmes in recent years, the new Pandemic Emergency Purchase Programme (PEPP) will likely be challenged in court. This policy brief assesses whether the PEPP will likely survive a legal challenge. It argues that the PEPP is compatible with EU law because it meets the three criteria the Court of Justice of the EU has established to check the legality of monetary policy measures: First, the PEPP falls within the ECB’s mandate. Second, it respects the principle of proportionality. And third, it does not violate the prohibition of monetary financing. This assessment even holds if the ECB were to relax some of the constraints in the PEPP like the issuer limit currently applicable to other bond-buying programmes.

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