(Updates with lawmaker’s comment in third paragraph.)
Oct. 25 (Bloomberg) -- German lawmakers are set to vote on a non-binding call for the European Central Bank to end its secondary-market bond-buying program once the enhanced European rescue fund is enacted,
The joint motion, agreed on by the government parties and the main opposition in Berlin today, sets out terms for the lower house, the Bundestag, supporting the European Financial Stability Facility in a vote tomorrow. It “notes that the need” for the ECB to continue its secondary-market program ends with the new fund’s enactment and urges Chancellor Angela Merkel’s government to “respect” the ban on central-bank credits as well as primary-market purchases by the ECB as the EFSF is set in stone.
“For us it was a condition that the Bundestag, respecting the central bank’s independence, has a clear position: no more unconditional debt-buying by the ECB,” Carsten Schneider, the opposition Social Democratic Party’s budget spokesman in parliament, told reporters after a budget committee meeting.
The motion sets criteria to which Merkel must adhere when she goes to Brussels after the EFSF vote tomorrow for a second European summit in four days. The budget committee or the full chamber must be allowed to vote once more after leverage models have been transformed into guidelines for the fund, according to the text. It also stipulates that systemically important banks re-capitalize by June 30, 2012.
Merkel said earlier today that Germany opposed the inclusion of a reference to the ECB continuing its bond-buying program in a draft text prepared for tomorrow’s summit. While officials are still working on the text, “the wording doesn’t state that there should be more secondary-market purchases, but rather that the non-standard methods of the European Central Bank could be pursued further,” she said.
The motion, drafted by ruling coalition lawmakers and distributed to reporters by Merkel’s Christian Democratic Union, aims to attract the broadest possible support from the opposition Social Democrats and Greens in tomorrow’s vote by seeking to curtail the potential demands on German taxpayers of the enhanced fund.
These include ensuring strict adherence to the EFSF’s guarantee framework, with a cap on German guarantees at the existing level of 211 billion euros ($293 billion), and ruling out “optimizations” of the EFSF that can alter its framework treaty.
--Editors: Eddie Buckle, Balazs Penz
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