German constitutional court rules partially against PSPP

The German constitutional court ruled this morning against the ECB’s Public Sector Purchase Proga m, criticizing that the decision lacked a thorough assessment of the “proportionality” of the program. Accordingly , the court demanded that the Bundesbank should stop its participation in the PSPP after a transition period of three months. The court, however, also suggested that the Bundesbank could continue to participate if the ECB explains “comprehensibly” the impact of the program, including its proportionality. Thus, the court has opened a door for rectifying the situation. In any case, the ruling only binds the Bundesbank. Other national central banks can, and will, continue to purchase sovereign debt.