Legal, compliant and suitable: The ECB‘s Pandemic Emergency Purchase Programme (PEPP). Bertelsmann Stiftung Policy Brief March 2020.

Grund, Sebastian (2020) Legal, compliant and suitable: The ECB‘s Pandemic Emergency Purchase Programme (PEPP). Bertelsmann Stiftung Policy Brief March 2020. [Policy 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 program- mes 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 com- patible 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 measu- res: 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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