Frankfurt was one of the most important decisions of the European Central Bank (ECB) in the fight against the debt crisis compatible with the German basic law?
The Federal Constitutional Court judges on Tuesday whether the ECB in 2012, in its decision, if necessary indefinitely to buy bonds of individual euro crisis states, exceeded its monetary policy mandate. The so-called “OMT” program contributed to the satisfaction of experts to defuse the sovereign debt crisis, although it was ultimately never implemented. Despite Meanwhile, the announcement of such bond purchases by the ECB had triggered sharp criticism and a wave of lawsuits, particularly in Germany.
The Karlsruhe judges are faced with a difficult decision because they had two years ago still argue that OMT purchases against the prohibition on monetary state financing violated. Should they now classify the OMT program as unconstitutional, a lot of European porcelain would smash. For the European Court of Justice (ECJ) had already been issued in the last year of the ECB in its judgment an extensive free ride for OMT [nL5N0Z22ZH]. An open conflict with the Luxembourg court would therefore result. The stock of European law would wobble when national courts always have the last word.
“When this occurs, could require the Constitutional Court German institutions such as the Bundestag and the Federal Bank, a to work the task of the OMT program, “says Johannes Mayr, team Head of economy at Bayerische Landesbank. “Even harder when the judges of the Federal Bank prohibit participation in the OMT program would.” That this will happen, the expert believes, however, not. The ECJ had already addressed the concerns of the Constitutional Court, by setting out certain conditions for OMT. “This could be the Karlsruhe judges are paving the way to agree the OMT program despite existing concerns,” said the expert. But there remains a residual risk.
The Constitutional Court had already in 2013 dealt with the OMT-decision and made his criticism clear. It then handed but in 2014 the proceedings to determine to the ECJ and reserved to the final testing. At the hearing in Karlsruhe in February signaled Court President Andreas Voßkuhle that a sharp break with the ECJ is to be avoided. Because Voßkuhle stressed that demanded by the Constitutional Court regulations for limiting the OMT program were broadly reflected in the ECJ ruling.
CRITICAL JUDGMENT COULD ECB POLICY WEAKNESSES
from the perspective of Commerzbank economist Michael Schubert, the ECB would be strengthened, the judges should keep the OMT program compatible with the basic law. “Conversely, would suffer the markets’ confidence in the ability of the ECB, if the Constitutional Court concludes that the ECB had exceeded its mandate with OMT.” According to him, the judgment could also have consequences for the currently ongoing, applied to 1.74 trillion euros securities purchase program of euro Fed. Because the judges may make their agreement to the OMT program, for example, dependent on the central bank limited the scope of its bond purchases. With such specifications from Karlsruhe would the ECB probably harder from expert voice to extend its current bond purchases again.
Some economists showed in spring a possible compromise position for the Constitutional Court judges on. According to the so-called Kronberger circle, amongst which the Member of Economic Experts Lars Feld and the new Ifo chief Clemens Fuest include, the Constitutional Court could not follow the ECJ ruling only result in the grounds. In this way the judges would own scrutiny of monetary policy steps based on its own standards reserved for the future, without tipping the ECJ judgment.
had complained against OMT including the CSU politician Peter Gauweiler, the club “more democracy” to the former German Justice Minister Herta Däubler-Gmelin (SPD) and a professorial group to the Tübingen economist Joachim Starbatty. You more than 11,000 citizens had joined.
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