Eurozone Breakup Risk at New High
The German Constitutional Court made an unexpected and significant ruling last week against the ECB and Quantitative Easing.
QE Deemed Illegal
In the midst of a pandemic and an important presidential election, it is very easy to miss globally significant events.
Here is one that is way under the radar: The German Constitutional Court ruled the ECB’s QE Program Could be Illegal.
That is a landmark ruling that challenges the independence of the ECB and the authority of the Court of Justice of the European Union (CJEU).
In announcing the ruling, German Chief Justice Andreas Voßkuhle said the CJEU had approved a practice that “was obviously not covered” by the ECB’s mandate. Voßkuhle spent months crafting the 77-page decision, announcing the ruling just a day before his official retirement on Wednesday. “
Dismissing a 2018 CJEU decision to allow the bond purchases, the German court ordered the ECB to provide Germany with adequate justification for the program within the next three months. Should it fail to do so, the Bundesbank, Germany’s central bank, would no longer be permitted to participate in the program.
What it Means for the Future of the EU
Eurointelligence explains What it Means for the Future of the EU.
The ruling raises complex and potentially troubling issues for the EU as a whole. The German constitutional court has accused the ECB and the CJEU, the court of Justice of the European Union, of abusing their power, and of acting beyond their assigned competences. That concept is known in German constitutional law as acting ultra vires. In the German legal interpretation of European integration, all sovereignty still rests with the member states. The EU is clearly not a federal state, but a deferred power.
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