The European Union’s highest court on May 8 reportedly said that it alone had legal authority over the European Central Bank (ECB) and it firmly rejected the German Constitutional Court ruling which was critical of the bank’s ambitious stimulus policies. The unusual intervention comes after the German ruling reportedly issued particularly harsh criticism of European court judges which led to a clash between the EU institutions and their most powerful member state.
The ECB in a reported statement said that in order to ensure that EU law is applied uniformly, the Court of Justice (ECJ) alone has the jurisdiction to rule that an act of an EU institution is contrary to EU law.
The statement further read that the divergences between courts of the number states as to the validity of such acts would indeed be liable to place in jeopardy the unity of the EU legal order and to detract from legal certainty. Meanwhile, Germany’s Constitutional Court said that the ECJ has rubber-stamped ECB policy with confusing argumentation and declared it not legally binding.
According to an international media report, the EU-watchers feared that the judgement could be a boost for nations like Hungary and Poland, whose reforms to the political and judicial systems have drawn allegations they are undermining democracy. However, the German judges gave the ECB three months to justify its policies. The bank also said that it will try to find a diplomatic solution. According to a media report, the German judges in Karlsruhe also said they will ban the country's powerful Bundesbank central bank from participating in the stimulus.
The ECB’s massive bond-buying programme is reportedly credited with having put an end to the eurozone debt crisis. Meanwhile, the German judges demanded in particular more details about the pros and cons of the ECB’s 2.2 trillion euros of government bond purchases since 2015, under a programme known by the initials PSPP. However, some observers are also concerned that the court decision will be used in Germany to discredit another bond-buying spree by the ECB designed to shield Italy, Spain and others from economic devastation caused by the coronavirus crisis.