June 11 - Germany's Constitutional Court is holding a hearing to look into charges that the ECB's Outright Monetary Transactions (OMT) programme is really a vehicle to fund euro zone member states through the back door, which would be a violation of German law. Since being announced by Mario Draghi last year, the ECB hasn't bought any bonds of any struggling euro zone governments, but the programme has been credited with calming the markets. As Joanna Partridge reports, the court's failure to approve the scheme could have big implications.
The battle of the banks begins in Karlsruhe. The European Central Bank is taking on the Bundesbank in Germany's highest court. The ECB is defending its OMT bond-buying programme against charges that it's an illegal way to fund euro zone states. SOUNDBITE: PRESIDENT OF CONSTITUTIONAL COURT ANDREAS VOSSKUHLE SAYING (German): "We will have to decide to what extent the ECB is making use of competences which have not been awarded to it, and were not allowed to be awarded to it as far as the constitution is concerned. And to what extent the normal citizen is affected by this." German Finance Minister Wolfgang Schaeuble gave evidence to the judges. He supports OMT and has previously warned of "unimaginable consequences" for the euro zone, if the court doesn't approve the programme. SOUNDBITE: Wolfgang Schaeuble, German Finance Minister, saying (German): "The lawfulness of this case against the ECB is highly controversial. The government has made its view clear. Incidentally it is critical that the independence of the ECB is protected. That was something essential which Germany demanded when the European currency union was founded and that's why we are defending this independence." ECB President Mario Draghi announced the scheme to help euro zone strugglers last year. It gave investors more confidence and calmed markets. But 35,000 Germans - fed up with paying the lion's share of euro zone rescues - complained. So did Germany's central bank even though not one bond has yet been bought as part of the programme. Michael Ingram from BGC Partners. SOUNDBITE: MIKE INGRAM, MARKET ANALYST AT BGC PARTNERS, SAYING (English): "There's a massive PR exercise going on here. But of course at the end of the day, there's always the chance that Karlsruhe are going to turn around and say, no, we don't like this OMT, we don't like the open-ended nature of OMT." The court will take two days to hear both sides' views. But a ruling isn't expected until after the German federal elections in September. The court can't order the ECB to revoke the programme, but it could try to set limits on how much it could spend on bonds.