Today, the German Constitutional Court decides on quantitative easing: a rejection would terrify the markets

The eight Karlsruhe judges led by Andreas Vosskuhle will decide whether the bond purchase program launched by the ECB in 2015 (officially to combat deflation, but QE has greatly contributed to driving the next economic recovery), whether or not it violates its mandate. In short, German judges have to decide whether the guardians of the European single currency harm the European Central Bank’s ban on debt financing.
The numerous appeals that have been made against the fundamental movements in Frankfurt presented in recent years by German economists, jurists and businessmen respond to the same obsession, typical of Angela Merkel’s country. For the German Orthodox, the ECB must carry out monetary policies and regulate inflation: everything that goes further is essentially illegal.

To be precise, if constitutional judges considered Qe to be illegitimate today according to European standards, therefore, purchases would also be illegal for Grundgesetz, the German Constitution. Therefore, the Bundesbank should be excluded from the purchasing program.

From a purely technical point of view, QE could continue even without the Bundesbank buying German government bonds. But an ECB that has to do without its majority shareholder, Germany, for one of the biggest programs launched in recent years, would have a devastating effect from a political point of view. It would be a very serious rift in the heart of Europe. And the markets would also panic.

Until now, the Karlsruhe Court has always rejected the numerous appeals by German economists against the main actions taken by Frankfurt. But in a previous sentence, in 2015, the eight judges had already voiced huge doubts about the extraordinary movements of the euro guardians. They then saw the risk of “significant redistribution between Member States” by the ECB, therefore, of illegal action, from the point of view of the Treaties. At that time, however, the German judges had delegated the final decision to the Court of Justice of the European Communities. And the Luxembourg Court had not seen any damage to the Treaties in the ECB action.

However, in 2017, the judges led by Andreas Vosskuhle once again questioned QE, making it clear that it viewed both the ban on financing the debts of individual member countries and the intervention limits set by the Treaties as detrimental. Again, it was the European Court that decided instead. Today comes the final prayer. And it can make Europe tremble.

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