The European Central Bank won crucial backing yesterday for its pledge to do whatever it takes to support the euro when a top EU legal adviser removed a hurdle to the bank’s plans to buy government bonds to bolster the euro zone economy.

Pedro Cruz Villalon, advocate general to the European Court of Justice, said a 2012 ECB bond-buying blueprint, designed at the height of the euro zone crisis to avert a break-up of the single currency and unused so far, did not break EU law. The opinion was a clear rebuff to German critics of bond-buying, who argue the ECB would reward spendthrift states with cheap credit by printing fresh money and deter painful reforms.

“The OMT (Outright Monetary Transactions) programme... falls within the monetary policy for which the (EU) Treaty makes the ECB responsible,” said Cruz Villalon, in an opinion which was met by enthusiasm on financial markets. The adviser’s opinion, which is usually followed by the court’s judges, was a milestone in a long-running dispute about printing money and the limits of central bank powers between the ECB and Germany, the largest member of the 19-country bloc. It was a setback for those in Germany’s conservative financial establishment who want to stop ECB plans to print fresh money to buy government bonds and a boost for the Frankfurt-based central bank. The German Finance Ministry welcomed the opinion, saying it provided clarity and upheld Berlin’s support for the programme.

The ECB would turn into a bad bank

Peter Gauweiler, a conservative Bavarian politician and co-initiator of the lawsuit, pointed to the adviser’s limitation on any ECB role in the troika of creditors that directed reforms in bailed out states such as Greece. But other critics were dismayed by the freedom the opinion gave the ECB to act.

“The ECB would turn into a bad bank,” said Hans Michelbach, a member of Chancellor Angela Merkel’s Bavarian sister party.