Consequences of the ruling of the German constitutional court

The partial rejection of the ECB’s sovereign debt purchase program by the German Constitutional Court seems to raise more questions than it provides answers . With respect to its short-term consequences, w e don’t think that the ruling will slow the ECB in any way in purchasing financial assets as deemed necessary by the ECB’s Governing Council . Moreover, we expect the Bundesbank to continue its participation in the program. But it is also true that the ruling poses more fundamental questions about the EU’s future path and the “ robustness ” of its institutional framework. At the core of the conflict is the question how far European law reaches ? The view expressed by the German court is that , as long as the ultimate democratic legitimacy rests at the national level, national courts have the right to assess whether the E uropean Court of Justice acts “ultra vires”, that is outside the competencies granted by the EU treaty. Whether this simmering constitutional crisis escalates further will also depend on the political response given by governments . That said, the political response is unlikely to be far reaching enough to solve the underlying tension once and for all . W e will continue to live with some legal ambiguity for the time being .