When it comes to adjudicating the European sovereign debt crisis, the German Bundesverfassungsgericht emerges as a sharply divided court. Back in August 2012, Mario Draghi pledged to do “whatever it takes” to prevent a single currency break-up. His words were followed by the Outright Monetary Transactions Programme (OMT), allowing the ECB to buy unlimited government bonds of over-exposed eurozone countries. The so-called “magic” of the OMT was that it has worked without ever being activated—the statement of a credible commitment alone was sufficient to stabilize markets without the ECB ever having to buy a single bond so far and to stop sovereign bond spreads.
In its pronouncement of February 7, 2014, on whether the ECB’s sovereign bond-buying program is “ultra vires,” the 2. Senate of the BVG, with a majority of 6:2, has for the first time ever turned to the CJEU for a preliminary ruling. But, appearances to the contrary, the deployment of the reference procedure is anything but an act of European-friendliness and judicial comity. The senate’s majority opinion uncompromisingly expressed its categoric view that essentially due to its unlimited nature the OMT programme indeed amounted a “structurally significant transgression of powers” under EU Treaty law: according to the six judges, “there are important reasons to assume that [the OMT-programme] exceeds the ECB’s monetary policy mandate and thus infringes the powers of the Member States, and that it violates the prohibition of monetary financing of the budget.” The consequences of these words are dramatic. For starters, those words may well set the stage for a constitutional conflict between the BVG and the CJEU, should the latter—as observers think is likely—see things differently and provide the OMT with a clean bill of health by declaring it an act of monetary policy. Perhaps even more fundamentally, rather than recant or eat its words, the BVG, upon a future constitutional complaint which the ruling self-consciously invites, has fully put itself on course of ordering Germany to leave the Eurozone entirely. In an ironic reversal of Draghi’s words, and in its own peculiar way, the BVG, too, seems bent on doing “whatever it takes.” Continue reading