Top court blocks Merkel plan to fast-track bailout
GERMANY’S efforts to set up a parliamentary committee to approve urgent action by the Eurozone bailout fund have been deemed “in large part” unconstitutional by the county’s top court, hampering efforts to ensure failing states can be rescued.
The European Central Bank (ECB) stopped accepting Greek government debt as collateral after Standard and Poor’s put the country’s debt in “selective default”, forcing Greek banks to turn to the national central bank for emergency cash.
The German constitutional court’s ruling means any use of the bailout fund to give loans to troubled countries must be approved by either a full session of the 620-strong parliament or its 41-member budget committee.
The special committee of nine MPs will only be allowed to approve the purchase of debt on the secondary market by the fund – a facility that has not yet been used.
Finance minister Wolfgang Schauble warned the bailout fund must be able to be used quickly when a country needs help.
Meanwhile official data showed a small improvement in economic sentiment in the Eurozone in January, though confidence remains fragile.