On the 26th July 2012, a time characterised by uncertainties about the future of the Eurozone, Mario Draghi, President of the European Central Bank (ECB) declared “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” The announcement detached historic political, economic and especially legal incidents. Only two months later, the ECB published a press release, which proclaimed the introduction of Outright Monetary Transactions. These operations allowed for the purchase of government bonds form Member States (MSs), which take part in the ESFS or ESM and conquer macroeconomic structural adjustment programmes. Despite the fact that the press release was hardly ever followed by a binding legal act or instrument to implement OMT, the mere pronouncement had the power to reassure the financial markets. From that date on, there were no more such extreme spreads in interest rates for government bonds.
But the announcement caused a judicial tremor, known as the Gauweiler case. In response to Gauweiler and others’ complaint against the OMT, the German Federal Constitutional Court (BVerfG) asked the Europan Court of Justice (ECJ) the first time in history for a preliminary ruling (Art. 267 TFEU) on the legality of the OMT programme. According to the BVerfG the ECB has exceeded its role provided by the Treaties of the European Union ultra vires by initiating a measure that a) has an economic and not a monetary nature (Art. 127 TFEU) and b) violates the prohibition of monetary financing (Art. 123 TFEU). The ECJ’s judgement was very different from that of the BVerfG, in the way that the OMT programme is compatible with EU law in the light of the European Court. Gauweiler had extensive implications on the powers of the ECB, the relation-ship between the ECJ and national courts (especially the BVerfG) and the constitutional framework of the European Economic and Monetary Union (EMU). In addition, the case made important contributions to the distinctions between economic and monetary policy.
Table of Contents
I. Introduction
II. Demarcation of Courts’ Competences
III. Competences of the ECB, its Role in the Financial Crisis and the OMT Programme
IV. Decision of the ECJ in Contrast to the Decision of the BVerfG
a. Admissibility
i. Perspective of the BVerfG
ii. Perspective of the ECJ
b. Economic and Monetary Policy under Art. 127 TFEU
i. Perspective of the BVerfG
ii. Perspective of the ECJ
c. Prohibition of Monetary Financing under Art. 123 TFEU
i. Perspective of the BVerfG
ii. Perspective of the ECJ
d. Reaction of the BVerfG
V. Consequences of the Ruling
a. Role of the ECB
b. The Relationship between the ECJ and the BVerfG
VI. Summary and Outlook
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