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Posted: Sat Apr 05, 2025 6:31 am
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ALL EYES ON GERMANY: The German Constitutional Court, or the Bundesverfassungsgericht, will hold a crucial hearing today and Wednesday: For the third time, it’ll consider whether or not the European Central Bank acted within the scope of its mandate with its latest bond buying program, called PSPP, which ran between 2015 and 2018 and was worth some €2.6 trillion (that’s 12 zeros).
The crucial questions: Is the ECB’s special lead program monetary, or economic, policy? Does the ECB’s independence mean it can do whatever it wants (or “whatever it takes,” to use ECB President Mario Draghi’s famous words from 2012)? And who could possibly show the bank the limits of its mandate? The German Constitutional Court reckons it can, if all else fails (meaning if it concludes the European Court of Justice didn’t).
The dilemma: The German judges had referred their questions to the ECJ, which has already delivered its ruling — it established in principle that it has the final say over the ECB’s mandate, and said it has less of a problem with the purchasing programs than its German colleagues did. Now the German Constitutional Court is deciding whether to accept the ruling from Luxembourg, or to say “Nein” — via the nuclear option of declaring the ECJ acted ultra vires, or beyond its competence.
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ALL EYES ON GERMANY: The German Constitutional Court, or the Bundesverfassungsgericht, will hold a crucial hearing today and Wednesday: For the third time, it’ll consider whether or not the European Central Bank acted within the scope of its mandate with its latest bond buying program, called PSPP, which ran between 2015 and 2018 and was worth some €2.6 trillion (that’s 12 zeros).
The crucial questions: Is the ECB’s special lead program monetary, or economic, policy? Does the ECB’s independence mean it can do whatever it wants (or “whatever it takes,” to use ECB President Mario Draghi’s famous words from 2012)? And who could possibly show the bank the limits of its mandate? The German Constitutional Court reckons it can, if all else fails (meaning if it concludes the European Court of Justice didn’t).
The dilemma: The German judges had referred their questions to the ECJ, which has already delivered its ruling — it established in principle that it has the final say over the ECB’s mandate, and said it has less of a problem with the purchasing programs than its German colleagues did. Now the German Constitutional Court is deciding whether to accept the ruling from Luxembourg, or to say “Nein” — via the nuclear option of declaring the ECJ acted ultra vires, or beyond its competence.