The German Constitutional Court’s ruling on the ECB’s unlimited bond buying programme (OMT) has been delayed again and again. Now, the court has referred the case to European Court of Justice. This has always been one of the possible scenarios. Now it has happened, for the first time ever.
The court says that the OMT programme might be compatible with primary law and the ECB’ mandate if interpreted restrictively but sees “important reasons” suggesting it is actually not compatible. Buying bonds on secondary markets could just be a way to circumvent the rule banning purchases on primary markets, the court argues. But now it is up to European judges to decide. Two of the eight judges had a different view arguing that the court should not have accepted the suits in the first place.
Can OMT still go wrong? Well, it can in theory, but very likely it will not in practice given the pro-integration reputation of the European judges. The press cites legal experts saying that it could take more than a year for the European Court of Justice to rule on OMT.
In the run-up to the European election next May, Euro / Europe critics will happily take the decision as one more proof of national sovereignty being eroded. But that’s what integration is all about. All in all, the pro-European stance of the German population is still relatively strong.
The German Constitutional Court will issue a ruling on 18 March about the European Stability Mechanism (ESM) and the Fiscal Pact. While that is generally seen as less critical, it will still attract some attention. I would expect the court to show enough sense of “Realpolitik”, as it did in the past – and also with today’s decision.
Nordea