In an effort to respect the independence of the European Central Bank (ECB) from political power, euro area finance ministers on Friday 8 May did not officially put on their agenda a discussion on the recent judgment of the German Constitutional Court in Karlsruhe (see EUROPE 12480/17).
But the pressure exerted by the Karlsruhe Court on the Frankfurt Institute’s very accommodating policy and a thinly veiled challenge to the legal order of the European Union continue to provoke reactions.
The President of the Eurogroup, Mário Centeno, recalled “two principles” that must always be respected: “the primacy of EU law” over Member States’ law, and “the independence of the ECB”, which we hold dear. Participating in the meeting, ECB President Christine Lagarde recalled that the monetary institute will continue to do ‘whatever is necessary’.
“The independence of the ECB is beyond question”, added European Economic Commissioner Paolo Gentiloni. The Commission is still studying the German court’s judgment before acting, he added, assuring that it will not hesitate to ensure the ability of the ECB and the Court to act as provided for in the European Treaties.
On Friday, the EU Court of Justice gave its side of the story once and for all. It pointed out that, according to settled case law, any judgment in which the Court gives a preliminary ruling is “binding on the national court for the purposes of the decision to be given in the main proceedings” (Case C-446/98). It goes on to say: “In order to ensure that EU law is applied uniformly, the Court of Justice alone [...] has jurisdiction to rule that an act of an EU institution is contrary to EU law. Divergences between the courts of the Member States as to the validity of such acts would indeed be liable to place in jeopardy the unity of the EU’s legal order and to detract from legal certainty” (Case C-314/85).
The Court also stressed that, by ensuring the full effect of EU law, national courts preserve “the equality of the Member States in the Union” (Case C-212/04).
On the previous day, the President and the Vice-President of the ECB broke their silence (see EUROPE 12482/10). In particular, Mrs Lagarde assured that the monetary institute would be undeterred by the German Constitutional Court’s judgment. “We are an independent institution, accountable to the European Parliament, driven by a mandate”, she told an online event organised by Bloomberg.
The Karlsruhe Court gave the ECB 3 months to justify the proportionate nature of the quantitative easing operation (PSPP) for a massive repurchase of mainly public securities launched in 2015 to combat low inflation. Otherwise, the Bundesbank could be forced to withdraw from the operation.
It is not clear, at this stage, whether or how the ECB intends to clarify its action, in addition to the statements made by its management. (Original version in French by Mathieu Bion)