German court hands ECB 3-month ultimatum to justify stimulus scheme

Germany's highest court on Tuesday gave the European Central Bank (ECB) three months to justify bond purchases under its flagship stimulus program or lose the Bundesbank as a participant, raising questions about both the scheme and the euro's future.

The verdict dealt a blow to the unprecedented 2-trillion-euro purchase scheme that helped kickstart the eurozone economy after its financial and debt crises of a decade ago, but which critics argue has flooded markets with cheap money and encouraged over-spending by some governments.

It also put the Constitutional Court in Karlsruhe at loggerheads with the European Court of Justice, the highest court in matters of European Union (EU) law. It had cleared the Public Sector Purchase Programme (PSPP) in 2018.

As European bonds and the euro fell, the EU's executive commission reaffirmed "the primacy of EU law" within...