Germany's constitutional court has given the European Central Bank three months to justify its bond-buying
THE MAGNIFICENT scarlet robes that adorn the judges of Germany’s constitutional court trace their origins to a spot of judicial attention-seeking. Soon after the court was established in 1951, its judges decided they needed to distinguish themselves from their peers on the Federal Court of Justice, and recruited a theatrical costumier to update their look. Yet, as the judges showed on May 5th, their rulings can be even more eye-catching than their attire.
It will take months for the ruling’s full consequences to unfold. But in the short term little will change. The PSPP looks safe. Karlsruhe rejected the plaintiffs’ claims that it violates the EU ban on monetary financing of governments. Instead, it gave the ECB three months to justify its bond-buying. The bank’s battalion of lawyers can probably pass this test—though the ECB may refuse to be ordered around by a mere national court. The German government may then have to get involved.
This challenge to the EU’s supreme legal authority has not gone unnoticed elsewhere. The deputy justice minister of Poland, which has been locked in rule-of-law wrangles with the EU for years, said that the Karlsruhe ruling was of “tremendous importance” to his own country’s disputes. Others speculated that a southern European court might one day rule against the ECB for failing to give due weight to employment or growth effects in its decision-making.
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