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German court sends challenge to ECB's QE program to European Court

Germany's constitutional court declined to hear a challenge to the European Central Bank's quantitative easing program and sent it to the European Court of Justice, Reuters reported.

The constitutional court said there are doubts regarding the compatibility of the asset purchase program with the ban on monetary budget financing and asked the European Court to deliver a judgment quickly.

The challenge, lodged by academics and politicians, argued that the ECB's asset purchase scheme constitutes illegal monetary financing and so the Deutsche Bundesbank, the biggest buyers of bonds in the program, should not participate.

The ECB has said its rules take into account the European Court's limitations and the scheme was meant to fulfill its legal mandate of returning inflation to around 2%.

The European Court has already backed the ECB's emergency bond purchase scheme with only minor limitations.

Any final ruling is only expected to come either after the end of bond purchases or near the end of the program, which has been running for more than two years and is expected to be wound down next year, Reuters said.