Abstract
AbstractFew court cases in the history of European integration have been more controversial than the decisions of the Court of Justice of the EU and the German Federal Constitutional Court on the European Central Bank's public sector asset purchase programmes. This article regards consistency and coherence in the case law as uncontroversial minimum conditions that have to be satisfied for the decisions to gain legitimacy. It assesses the case law against this benchmark and determines the limits of asset purchase programmes under a consistent and coherent application of the legal tests developed by the courts.
Highlights
At the heart of the eu>. Decision (EU)’s response to the unprecedented challenges that European monetary union has faced since the sovereign debt crisis are several unconventional monetary policy measures of the European Central Bank (ECB) that involve the large-scale purchase of government bonds of Eurozone Member States
The outright monetary transactions (OMT) decision consisted in an announcement that the Eurosystem stood ready to buy potentially unlimited amounts of government bonds of Member States that were in receipt of financial assistance from the European Financial Stability Facility (EFSF) or its successor, the European Stability Mechanism (ESM), in the secondary markets.[1]
We will focus on the characteristics, operation, and economic relevance of the measures challenged in the two cases —the two decisions of the ECB announcing outright monetary transactions and public sector asset purchases—insofar as this is relevant to our critique of the legal reasoning of the Court of Justice and the Federal Constitutional Court (FCC)
Summary
At the heart of the EU’s response to the unprecedented challenges that European monetary union has faced since the sovereign debt crisis are several unconventional monetary policy measures of the European Central Bank (ECB) that involve the large-scale purchase of government bonds of Eurozone Member States. The article offers an analysis of the legality of the PEPP, and more generally of public sector asset purchase programmes, under a consistent and coherent application of the legal tests of the Court of Justice. Gauweiler and Weiss are, arguably, ‘hard cases’, because of their political dimension, and because the relevant Treaty provisions use terms that are neither defined in the Treaty, nor associated with a clearly delineated meaning, such as ‘monetary policy’.19 In such cases, courts often appeal to legal principles of a higher order to resolve an interpretive conflict.[20] higher-order principles, owing to their generality, will often be open to different interpretations or, where two or more higherorder principles can be invoked, it may be difficult to reconcile these principles.[21] For example, in the present context, there is a tension between the preservation of financial stability in the Eurozone, which may require fiscal transfers to address the asymmetric impacts of economic shocks on Member State finances, and budgetary autonomy of the Member States, which militates against transfer payments.[22] While it is possible rationally to.
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