Op-Ed: “The ECB is Responding to the Federal Constitutional Court of Germany: A Comparison of Monetary Policy Accounts” by Phedon Nicolaides
On 5 May 2020, Germany’s Federal Constitutional Court (FCC) ruled that the Court of Justice of the European Union (CJEU) acted ultra vires in finding that the Public Sector Purchase Programme (PSPP) of the European Central Bank (ECB) did not violate the principle of proportionality as defined in Article 4 TEU.
The FCC did not find convincing evidence that the ECB had demonstrated that the PSPP did not weaken the incentives of Member States to maintain sound budgetary policies. In addition, the FCC considered that the ECB did not take sufficient account of the impact of the PSPP on other parts of the economy such as pensions, savings, corporate survival, and so on. For these reasons, the FCC concluded that the P