Europe’s top court has heard a challenge to the European Central Bank’s bond-buying scheme to contain the euro zone debt crisis, in a case underscoring deep concerns in Germany over ECB clout.

The politically charged case comes more than two years after the ECB backed a scheme to buy government bonds, called outright monetary transactions (OMT).

That plan has since been all but mothballed, but the ruling, due next year, could have wide significance. If successful, even partly, the action by a group of Germans would encourage other challenges to the central bank.

That could hamper the ECB’s freedom to act on moves such as quantitative easing – or “printing money” – by buying state bonds across the euro zone.

The challengers argue the ECB’s plan to buy the bonds of troubled countries would have resulted in losses for the ECB and euro zone members such as Germany.

In the European Court of Justice today , the ECB defended its action, arguing it had acted as the “fire brigade” in an emergency, without breaking the rules. But its lawyers faced critical questions from the judges about the scheme, including how the ECB would protect itself from a state bankruptcy.

Its legal team appeared occasionally to be flustered, regularly regrouping in huddles to agree their position.

The plaintiffs’ lawyers argued that the ECB had overstepped the mark with its pledge to buy bonds of countries in a crisis, drifting beyond its monetary policy role of setting the cost of borrowing to interfering with management of the economy.

– (Reuters)