Discussion on the German constitutional court's ruling on ECB's QE program, impact on EU law and monetary policy. Exploring the challenges of the European Central Bank's actions, central bank independence, and UK's role outside the Eurozone. Rethinking societal systems post-crisis and promoting political podcasts and side hustle advice.
The German court ruling questions the supremacy of EU law over national law.
The judgment challenges the ECB's mandate and independence in economic policies.
The ruling calls for a reevaluation of the EU's legal and institutional framework for greater accountability and control.
Deep dives
The potential impact of a German court judgement on the European project
A recent judgement by a German court has the potential to significantly impact the European project. The court ruled that the European Central Bank's quantitative easing (QE) program was legal but criticized the German government and the German Bundestag for failing to control the ECB's program. The court also argued that the European Court of Justice made an illegal judgement when ruling on the legality of the program. Furthermore, the court demanded that the ECB provide a clear analysis and new decision on the proportionality of the QE program within three months. If such an assessment is not provided, the German Central Bank may no longer participate in the program. This ruling raises fundamental questions about the EU's legal and constitutional order, the extent of the ECB's independence, and the need for greater control over the ECB by national governments.
The implications of the judgement on the distinction between monetary and economic policy
The German Constitutional Court's judgement challenges the distinction between monetary and economic policy. The court accuses the ECB of venturing outside of its mandates by making decisions and taking actions that have broader economic implications. This challenges the notion of the ECB's independence from national governments and calls for greater control over the ECB's actions. The court also questions the proportionality assessment of the ECB, suggesting that it may have violated key articles of the European treaty. This raises crucial political and legal questions about the nature of the EU's legal order and the role of national constitutional courts in relation to the European Court of Justice.
The potential implications for the future of the European Union
The German court judgement raises important questions about the future of the European Union. It challenges the belief that EU law takes precedence over national law and questions the authority of the European Court of Justice over national courts. The ruling also challenges the assumption that the ECB's primary responsibility is price stability, raising doubts about its role in economic policy more broadly. Furthermore, the judgement questions the absolute independence of the ECB from national governments, calling for more accountability and control by national parliaments. These issues have broader implications for the EU's legal and constitutional order, raising debates about the nature of the European project and potential future challenges from other member states.
The need for institutional and constitutional reform in Europe
The German Constitutional Court's ruling highlights the need for institutional and constitutional reform in Europe. The judgement challenges the existing institutional framework and calls for a reevaluation of the EU's legal and constitutional order. It raises questions about the relationship between the European Court of Justice and national constitutional courts, the role and mandate of the ECB, and the level of control and accountability over the ECB's actions. This judgement may stimulate discussions about a potential conference for the future of the EU, which could lead to profound changes in the architecture of the European Union and the way decisions are made at the European level.
The role of the state and the potential for policy changes
The German court judgement highlights the role of the state in times of crisis and the potential for policy changes. It highlights the importance of the state in providing support and intervention during crises, challenging the idea that the state should stand aside and let markets prevail. This crisis is redefining the relationship between the state, business, and society, and is creating an opportunity for policy changes such as the Green New Deal. The crisis has shown the limitations of relying solely on the private sector and has opened up discussions about the role of the state in addressing key challenges, including climate change and inequality.
How does a judgement of the German constitutional court threaten to explode the European project? David talk to Helen Thompson, Adam Tooze and Shahin Vallee about what the court's decision might mean for the Euro, for the response to the pandemic, for Franco-German relations and for the future of central banks. Can the great European fudge continue? And what happens if it can't?
Plus a bonus chat with Ed Miliband and Geoff Lloyd from the ‘Reasons to be Cheerful Podcast’ https://www.cheerfulpodcast.com/
The German Constitutional Court ruled that the ECB’s QE program is illegal.
It says that the German government has failed to control the ECB’s program and its compliance with the German constitution.
It ruled that the European Court of Justice made an illegal judgment.
And it gives the ECB 3 months to provide a clear analysis and a new decision. If not, the German government can’t continue to participate in QE.
This raises three fundamental political questions:
Does EU law take precedence over national law?
Has the ECB ventured too far outside of monetary policy?
Should the ECB’s independence be as absolute?
Monetary union rested on a sharp distinction between monetary policy, which was going to be a matter for the EU, and the rest of economic policy, where there was going to be no federal authority.
The economic premise of monetary union is no longer supported by a great number of people in the monetary union.
Of course the advocates of the system believe the fudge.
This is a very political judgment.
The ruling inadvertently opens the question not only about the financial constitution, but, more deeply, if it’s time for the monetary union to have a proper fiscal risk sharing instrument, a proper budget, and political accountability.
The judgment forces a conversation about the architecture of the monetary union.
Part of this judgment is about democratic control over otherwise unaccountable institutions.
The German Constitutional Court is one of the anchors of the success of German democratic model since 1949.
It acts as a driver of modern constitutional jurisprudence.
Independent central banks were meant to reign in the inflationary tendencies of democratic governments. Now their primary role is to guard against the forces of deflation.
They have changed their character while maintaining their form.
The ECB’s QE was an absolutely massive bond buying scheme.
The court is registering the need to start talking about re-legitimising and redefining the role of central banks.
