Whatever It Takes? Regarding the OMT Ruling of the German Federal Constitutional Court

dahan, samuel ; fuchs,olivier ; layus, marie-laure;

On 14 January 2014, the Bundesverfassungsgericht (German Contitutional Court in
Karlsruhe hereafter Karlsruhe) ruled on the European Central Bank�s (ECB) Outright
Monetary Transaction (OMT) programme. This ruling has prompted fierce debate
among lawyers and economists for a number of reasons. First of all, the OMT programme concerned the very short-term survival of the euro. Secondly, in an unprecedented move, the Court took a position on the current incompleteness and asymmetry of the Economic and Monetary Union as well as on its future course. Indeed, the German Court has made a referral to the Court of Justice of the European Union (CJEU) for a preliminary ruling on two matters: (i) had the ECB exceeded its mandate by infringing upon the competences of Member States in the field of economic policy, and (ii) had it violated the prohibition against sovereign debt monetization stipulated in Article 123 of the Treaty on the Functioning of the European Union? While the content of the referral is critical, the decision to make a referral is in itself significant insofar as the Court has always refused to use this procedure even though such an abstention has been widely seen as a violation of European law. A third reason that the decision came under scrutiny is because the Constitutional Court added an unconventional twist to its preliminary ruling mechanism, ensuring it had the last word and reserving the option of not following the Court of Justice�s ruling. In other words, the German decision implied that although the Bundesverfassungsgericht was extending its hand to the CJEU, it was doing so with a closed fist