FAQ: What should the ECB? – tagesschau.de

For the second time Karlsruhe must decide on the powers of the ECB. It is not just about government bonds, but rather fundamental issues in the EU – also for the individual citizen.

From Frank groom, SWR, ARD-law expert

‘{‘ action ‘: {‘ default ‘[' toggleBody ']}} “ What are the sticking points of the process

In the core is about the allegation: the ECB had exceeded its powers in 2012 with the announcement of the purchase of government bonds on the secondary market ( “OMT program”). The trial raises many fundamental questions: What is the legal limits, the ECB is subject to? Which tasks in controlling exist between the European Court of Justice (ECJ) in Luxembourg and the Federal Constitutional Court in Karlsruhe? And: Can individual citizens in such cases go to court

What exactly was the reason of the method

Therefore you have to be in the” crisis summer “of 2012 move back. The euro debt crisis was at its peak. In July 2012, ECB President Draghi announced that his bank will do everything that is needed to solve the European debt crisis). On September 6, 2012 then joined Draghi in Frankfurt before the press. He announced a program called “outright monetary transactions” (OMT). The content: The ECB will buy up government bonds of crisis countries in an emergency on the so-called “secondary market”, ie in the financial markets, in unlimited amounts. Thus being deprived of the speculators the ground in the bond markets. As a result of falling interest rates, for the crisis countries could get fresh money. The purchase could take place in an unlimited amount, so Draghi then. The special feature: Previously, the OMT program has not been implemented by the ECB into action. Even the announcement was enough to calm the financial markets

In what context was Draghi’s announcement 2012.

the focus was in 2012, first the establishment of permanent European rescue ESM. Against the German participation in the ESM 2012 actions before the Federal Constitutional Court were filed in June. The nervousness was great. Would fail to Karlsruhe the euro rescue because Germany can not participate as a large donor country? On 12 September, the decision was announced in summary proceedings. The concern was unfounded. But a few days earlier, on September 6, 2012 then came the press conference Draghi to controversial OMT program. Since at least could give the impression that no matter what you will say to the ESM, love German judge, we in any case will engage in unlimited quantities in the markets

What previously happened legally

the legal dispute can be divided into three stages split:

• ” Karlsruhe 1 “: 2012 was the Federal Constitutional court numerous lawsuits against the announcement of the OMT program submitted by the ECB and that the German authorities failed to act. The basic question is: “Did the ECB therefore exceeded its mandate?” The Federal Constitutional Court said yes. The ECB overstepping its powers, because they are not confined to pure monetary policy, but illegal economic policies operate. Karlsruhe referred the case in 2014 the European Court in Luxembourg (ECJ) before, because it is about the interpretation of EU law and for the Court’s jurisdiction.
• “Luxembourg”: The Court saw the matter differently. 2015, it is judged that the OMT program the ECB is not contrary to EU law. The ECB is moving within its remit, but must observe certain limits in the implementation of the program. The process went as planned back to Karlsruhe.
• “Karlsruhe 2″: The Federal Constitutional Court must decide how to deal with the response from Luxembourg now concluded. In February 2016, the hearing was held on this issue. Now is the judgment on, so the final point.

” whatever is necessary, “- this phrase could not get public. Draghi’s statement had an attachment that went down, however. It read: “As part of our mandate.” And exactly at this point is the legal dispute on.

The basic framework of the case, there are at controversy over EU law repeatedly. Under the Basic Law of Germany may powers, so-called “sovereign rights” transferred to the EU. The other side of the coin is then but: EU institutions must move only in the context in which they were the sovereign rights transferred then. In the area of ​​monetary policy is about the transfer of responsibilities from the Bundesbank to the European Central Bank. Under the Basic Law, the transfer is allowed if the ECB is bound independently and the primary objective of price stability. The ECB is embodied by the EU Treaties as an independent central bank. The (selected) policy therefore has no right in interfering her. The counterbalance to independence is just that the ECB may act only within their competences.

Many German applicants and the Federal Constitutional Court complain that the ECB with the OMT program overstepping its powers. Not “everything necessary” so, but “everything is right” must be the guideline.

What does that mean for the purchase of government bonds

More specifically, the dispute revolves around two points:

• Under EU law is the task of the ECB: the with the aim of a stable currency with stable prices to guarantee. Not allowed her on the other hand: The priority is for the Member States. The question then becomes: In which area of ​​the purchase of government bonds on the secondary market fall? Allowed or banned? There are indications already a difficulty to: Can the areas ever precisely define, and how to make a dish
• The EU legislation regulates for the ECB “Simply put?. The ECB must not affect the save state budgets of indebted Member States or remediate

What does the dispute with the individual citizen to do

At second glance a lot. Because it is about nothing less than fundamental issues of democracy. Therefore one must again make the initial situation deliberately. Germany has transferred a number of powers to the EU through its elected representatives, including the tasks of the Federal Reserve to the ECB. should the EU but -Institution beyond its remit, the German citizen has the – to put it simply – not agreed. This is based on the following thought: The citizen has a fundamental right that he opposes any public authority, which it has not (at least indirectly) legitimized. For the financial risks of the ECB adheres at the very end, the German state budget.

Overall, the action (quite correct “constitutional complaint”) in Karlsruhe 37,000 citizens supported. The association “More democracy e.V.” is involved in this matter particularly

Why can citizens in a German court suing the ECB

When it comes to the accusation that EU institutions obviously and structurally important exceed their powers, the Federal Constitutional court has opened a right of action in recent judgments of the citizens. The design is quite controversial and is sometimes criticized as excessive. The citizens have a right to have transferred sovereign rights be exercised provided the framework. Otherwise will be suffrage “hollowed out”, his voice was not worth anything, so the judges. The right to vote of citizens in certain situations a kind of “strike” in Karlsruhe, but by no means in all things that have only something to do with EU law.

a direct path of the citizen to the European Court of Justice does not exist in such cases, by the way.

Go to Court to get as individual citizens only through the “detour” of the national courts. If rules are relevant from the European law for the decision, the national courts have the ECJ submit the questions. Luxembourg then decides how the EU legislation is to be understood, and are the case back to the national court.

‘{‘ action ‘: {‘ default ‘[' toggleBody ']}} “ What does the Federal Constitutional court criticizes in its order-decision

the Federal Constitutional court has followed the applicants in its decision of 7 February 2014 in many parts. It spoke weighty reasons that the ECB exceeds its mandate of monetary policy to the OMT program. One indication is that the ECB would buy only government bonds of individual Member States. Monetary policy typically affects all states equally. They also see the following danger: Utilities such as the European rescue fund ESM had an amount limited, as well as the parliaments have here control functions. With a purchase of government bonds by the independent ECB this control might be circumvented. Second complaint: The OMT program contrary to the principle of the EU treaties, that the ECB should operate no State funding

It is important for the final outcome. Karlsruhe can a “back doors” open. The program would not be objectionable, the judges, if you would move certain limits. As an example, called the court: the exclusion of a haircut, a purchase of government bonds only in limited amounts, and that there should be no intervention in the market price of the government bonds

‘{‘ action ‘: [' toggleBody ']} {‘ default ‘} “ Why Karlsruhe has initiated the procedure to the European Court of Justice

Basically, the following division of responsibilities that the Federal Constitutional court examines German acts against the standard of the basic law. The European Court examined European legislation on the scale of the EU treaties. However Karlsruhe has always reserved the final check whether the EU institutions clearly exceeded their powers in individual cases. In legal jargon that is then, they could act “ultra vires”. Then these acts should cease to have effect at least in Germany. To such an examination is all about. Would the ECB beyond its mandate evident, that would no longer be covered by the competences which Germany has transmitted to the EU institutions. However Karlsruhe has always said: Should you ever come to the conclusion “ultra vires”, you would submit the legal questions to the ECJ for examination. This is the first time happened in the history of the Federal Constitutional Court. On other courts, such as the Bundesgerichtshof, such templates are gang for many years and there, including also other constitutional courts of EU countries.

Does Karlsruhe “capitulated” to the template before the ECJ

?

No. The template is only once a sign of openness. For years we had talked about the “relationship of cooperation” of the courts only, now you’ve done for the first time seriously. About European law now chooses time the ECJ, so that is legally provided. The order for his questions but you could also be seen as a challenge to their colleagues in Luxembourg, along the lines of: “This is our interpretation of the law, we see ways how to fix the error, you go on a or not?” One could almost get the impression Karlsruhe wanted to Luxembourg “but yes,” challenge to a decision. Yes, the purchase of government bonds is possible, but the following limitations we believe are essential.

What decided the ECJ

The ECJ in its judgment of 16.6 .2015 replied to Karlsruher questions that the announced OMT program does not violate his view of European law.

• First emphasizes the ECJ ruled that the ECB a judicial review is subject. That was quite disputed in the process of other Member States.
• It sorts the OMT program but in the drawer “permissible monetary policy” a.
• The prohibition of public finance is a central principle which should also be in no way circumvented the ECJ. The guarantees in the “small print” of the ECB’s OMT program would but make sure it does not come to a breach of the prohibition in this particular case.

Why the Court assigns the OMT program as ” monetary policy “? a

the court of first ECB acknowledges a wide measure of discretion. An important criterion for the Court is the goal of their program specified by the ECB. And that is: price stability guarantee, in this case in the interest of government bonds. The court seems here more emphasis be placed on the objectives defined by the ECB itself as to the possible effects. That the program is suitable, the euro zone to stabilize economically, is harmless in this case. Such “indirect effects” were not sufficient to make a monetary policy a measure of economic policy.

Sets the ECJ ECB no boundaries

However, several , The ECB has the duty to give reasons for its decisions. The ban on the ECB to finance budgets of states in crisis seems to have significance for the judges. This prohibition should not be bypassed. The parties should not be to ensure that the ECB intervenes at the end. Therefore, it would for example be a minimum period between the issue of the bond and the purchase by the ECB. The ECB should not announce in advance their purchases. The idea is that the ECB the crisis countries not to take the incentive to pursue a “sound fiscal policy”. These and other guarantees does the ECB are already included in its OMT program.

It is clear that that Karlsruhe and Luxembourg in the central questions “monetary policy, yes or no?” different views are. For this question, it shows a different approach of the courts. The Court grants the ECB a greater discretion and more compliant in the control back. The ban on public finance hold both dishes very important. therefore ask both certain limits or conditions for the OMT program, which overlap in part or similar, partly not.