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  • German judges party dismiss ECB QE case in 7-1 ruling

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  • ECB decisions on the Public Sector Purchase Programme exceed EU competences

    From bundesverfassungsgericht.de

    In its judgment pronounced today, the Second Senate of the Federal Constitutional Court granted several constitutional complaints directed against the Public Sector Purchase Programme (PSPP) of the European Central Bank (ECB). The Court found that the Federal Government and the German Bundestag violated the complainants’ rights under Art. 38(1) first sentence in conjunction with Art. 20(1) and (2), and Art. 79(3) of the Basic Law (Grundgesetz – GG) by failing to take steps challenging that the ECB, in its decisions on the adoption and implementation of the PSPP, neither assessed nor substantiated that the ... (full story)

Wow! .... it looks like the German Judges still have some kind of independence(?) ..... Basing a judgement of this magnitude on "Grundgesetz" is ballsy .... to say the least! ..... The question is: how far will the EU tank?
Does that mean the EU/ECB are under German Rule or what..?
EURO is in trouble.
Make it Green
Quoting frontier
Does that mean the EU/ECB are under German Rule or what..?
No, the ECB itself is free to ignore this ruling, as they respond to the european court (whatever its name is).
But it means that the German banks can not participate in the program and knowing where the money in the EU usually comes from this is still severe.
Quoting Ojiego
Wow! .... it looks like the German Judges still have some kind of independence(?) ..... Basing a judgement of this magnitude on "Grundgesetz" is ballsy .... to say the least! ..... The question is: how far will the EU tank?
It should be mentioned, that this ruling was finalized before Corona struck. It was just not published until now.
can someone provide a quick layman's summary of what this means?
Quoting ieltsMike
can someone provide a quick layman's summary of what this means?
Basically: Banks are not allowed to do economical politics, but only fiscal policy by the German constitution. The bonds buying program violates this part of the constitution -> German Banks can not participate.

The ECB itself has to listen to the European Court of Justice, which previously has ruled contrary to the German ruling, that the bonds buying is not illegal. Therefore this ruling does not touch the ECB itself, who previously always pointed at this ECoJ ruling. But it doesn't help, because without the German banks the ECB is a toothless tiger.

Before the most common expectation was that while the BVG (German constitutional court) repeats their previous ruling that they believe it to be against the German constitution, but would still somehow push it towards the ECoJ, so stuff could continue as before.
This extremely hard rejection now came kinda as a shock.


As I mentioned before though, it should be considered, that this ruling was made before Corona struck, but just not published. So this is not the BVG judging against Corona measures, but a more general ruling against bonds buying programs.

Now for the future outlook: It will probably take a while for people to study the exact wording and reasoning. There might be ways to adapt the programs in order to comply with the BVG ruling, but figuring out what exactly is possible here will take some time, and potentially any adapted program will go to the courts again.
Quoting Mahrgell
{quote} Basically: Banks are not allowed to do economical politics, but only fiscal policy by the German constitution. The bonds buying program violates this part of the constitution -> German Banks can not participate. The ECB itself has to listen to the European Court of Justice, which previously has ruled contrary to the German ruling, that the bonds buying is not illegal. Therefore this ruling does not touch the ECB itself, who previously always pointed at this ECoJ ruling. But it doesn't help, because without the German banks the ECB is...
Thanks for a really good summary.
Thanks Mahrgell, that was a great explanation.
https://uk.reuters.com/article/uk-ecb-policy-germany-analysis/german-court-ruling-ties-ecbs-hands-now-and-in-the-future-idUKKBN22H1SP
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