For years, conservative German economists praised the German debt brake and the restrained spending policy of the German government. The European Treaties do not leave the member states much leeway when it comes to credit-financed fiscal policy, anyway. In the financial and euro crisis and also at the beginning of the Covid-19 crisis, it was thus the ECB’s expansive monetary policy that had to ensure that external shocks could be absorbed at least to some extent and that crisis countries were given access to relatively cheap money.
However, the BVerfG has now classified the purchase of government bonds as partially unconstitutional. With this in its reasoning unbalanced judgement, Germany’s highest court leaves behind some question marks, as Mark Schieritz explains in Die Zeit:
Peter Bofinger comments on the Federal Constitutional Court’s ruling on the legality of the ECB’s bond purchases in an article on Makronom. The court, he believes, reveals an economic view that is as one-sided as it is limited, which will harm Europe and hence Germany. After all, the court’s decision means a considerable restriction of the monetary policy independence of the European Central Banks.
Katharina Pistor (Columbia Law School) also harshly criticizes the judgment of the BVerfG. With its decision, the BVerfG has become the ultimate arbiter of ECB decisions and thus clearly exceeded its own limits, Pistor judges. The decision is a major problem, especially for future progressive ideas on fiscal and monetary policy in the EU. The court, which would thus turn the rule of law in the EU upside down, is insensitive to the political implications of its decision and thus risks an end to the euro and even the EU, Pistor argues.