The German Constitutional Court’s PSPP Judgment: Impediment and Impetus for the Democratization of Europe

Isabel Feichtner

doi:10.1017/glj.2020.60

Abstract

AbstractThe article explores the understandings of democracy underlying the judgment and its implications for the democratization of Europe. I read the judgement, critically, as impediment and, constructively, as impetus for the democratization of money and society. Firstly, I recount how the Federal Constitutional Court (FCC) through the construction of a “right to democracy” and the concepts of “ultra vires act” and “integration responsibility” asserted its jurisdiction over the limits of European integration. The court’s reasoning prompts me to understand the judgment not as a defense of democracy, but rather as an instance of upholding a “rule of law” that impedes the democratization of society. Secondly, I turn to the pronouncements on the demarcation of monetary from economic competences by the Court of Justice of the European Union (CJEU) and the FCC. I explain what I hold to be the weaknesses in the FCC’s critique of the CJEU from a doctrinal perspective. I then propose to read the PSPP judgment constructively as introducing a procedural requirement that may democratize monetary policy. Thirdly, I situate my reading of the judgment in the larger debate on the democratization of society and, more specifically, money.

Highlights

The article explores the understandings of democracy underlying the judgment and its implications for the democratization of Europe
The Federal Constitutional Court (FCC) in this judgment rules that EU institutions—the Court of Justice of the European Union (CJEU) and the European Central Bank (ECB)—had exceeded their powers and that the resulting ultra vires acts were not binding in Germany
It orders the federal government and parliament to “take steps seeking to ensure that the European Central Bank conducts a proportionality assessment in relation to the Public Sector Purchase Programme (PSPP).”2 The judgment does not rule on the Pandemic Emergency Purchase Programme (PEPP) that the ECB announced on March 18, 2020 to address the effects of the COVID-19 pandemic

Summary

The Right to Democracy and the Limits of European Democratization

In its PSPP judgment, the FCC finds a violation of the individual constitutional right to democracy. “[T]he transfer of monetary policy competences to an independent European Central Bank, and the resulting drops in influence (Einflussknicke) [of the popular sovereign via democratically elected officials (IF)], are still compatible with democratic principles on the grounds that it takes into account the proven and scientifically supported particularity of monetary policy, which is that an independent central bank is a better guarantor for monetary stability, and for the general economic foundation of the budgetary state policy, than organs whose activities are contingent upon monetary supply and monetary value, and which rely on the short-term approval of political actors.”15 This case law, read together with German public law scholarship on the monetary constitution, reveals a particular conception of money.. These safeguards include eligibility requirements—from which exceptions can be and have been granted for Greece—to ensure that no high risk bonds are purchased, as well as purchase limits, compliance with both being monitored by the ECB

Critique of the FCC

Reading PSPP as Impetus for the Democratization of Monetary Policy

The Democratization of Society and Money