Germany’s highest court has dismissed constitutional challenges to the ECB’s bond-buying programme, Outright Monetary Transactions (OMT), presented by the Frankfurt-based bank at the height of the euro crisis to stabilise the single currency.

Almost 40,000 complaints were lodged with the constitutional court in Karlsruhe, fearing the OMT buy-up of struggling euro members’ sovereign bonds amounted to illegal monetary financing by the ECB and could – if activated – create a massive financial liability for Germany.

On Tuesday, the constitutional court gave its conditional consent to Germany participating in the programme, still dormant, saying it “does not violate the complainants’ rights” and the German parliament’s rights, including its responsibility for national budgets, “are not impaired” by OMT.

List of conditions

Removing the last legal objection to the programme, four years on, the court presented a list of conditions for German participation in OMT, including that purchases must be limited from the outset; the purchases cannot be announced in advance; and the bonds bought may be held to maturity only in exceptional cases.

The court also ordered Berlin’s federal government and parliamentarians to “closely monitor” OMT and intervene if any “specific threat” to the budget arose because of the cost of bond-buying.

ECB president Mario Draghi’s promise in the summer of 2012 to “do whatever it takes” to stabilise the single currency area cheered financial markets, rattled by the euro crisis. But it is viewed as illegal by many Germans and, after a 2013 oral hearing, the Karlsruhe court appeared to agree, saying the programme appeared to be “incompatible” with EU law and out of step with the ECB’s mandate.

It forwarded the case on to the CJEU, responsible for overseeing the Frankfurt-based bank. Last year it ruled in favour of the ECB programme with some conditions.