German Court ruling threatens the EU’s pandemic response
Reacting to the German constitutional court’s ruling on the European Central Bank’s (ECB) quantitative easing programme Brendan Howlin TD, warned that this ruling could undermine the ECB’s €750 billion Pandemic Emergency Purchase Programme (PEPP).
Deputy Howlin said:
“In October 2018, the European Court of Justice (ECJ) ruled that the ECB’s bond-buying programme, funded through quantitative easing, did not infringe the EU’s ban on the monetary financing of Eurozone governments.
“However, this latest German court ruling undermines that ECJ’s judgement by instructing the German Bundesbank to pull out of the bond-buying programme within three months if it cannot justify that it is lawful under the European treaties. In fact, given the ECJ’s earlier ruling, the Bundesbank is likely to find that the programme is lawful. But two major problems result from this ruling.
“The first problem is that the German constitutional court has opened up a backdoor to undermine judgements of the European Court of Justice which are meant to be final. By focusing on just German institutions, the German court has remained within its own jurisdiction, but it threatens to pull German co-operation from the European level and thus collapse the joint programme. This is obviously serious because Bundesbank participation is so central to the ECB’s bond-buying programme.
“The second problem is that the ruling opens the door for the plaintiffs – a group of Eurosceptic academics and businesspeople – to bring a case against the ECB’s Pandemic Emergency Purchase Programme (PEPP). The PEPP was explicitly excluded from the earlier German judgement. Because the PEPP is much less constrained than the original bond-buying programme, it will be more difficult for the Bundesbank to justify its participation. And if the German central bank pulls out, the €750 billion programme will collapse and member state economies across the EU will also collapse. The situation is potentially very serious, and Ireland could be badly affected.
“At a time when we need greater European solidarity and co-operation, this legal action is yet another attack on the EU by Eurosceptics. The Taoiseach needs to immediately raise this issue with his counterparts across the EU to ensure that the ECB’s bond-buying programme is legally robust and will continue in any eventuality.”