Europe’s top court hits back at German ECB ruling

In an unprecedented move, the European Court of Justice has said that a recent ruling by a German court on the powers of the European Central Bank could place in jeopardy the unity of the EU's legal order

Carsten Brzeski

Global Head of Macro

This is the latest episode in the 'War of the Courts', with the European Court of Justice clearly telling the German constitutional court to back off. And it clearly looks as though it's giving support to the European Central Bank's preferred stance of 'don't respond'.

The ruling of the German court on May the 5th, that the ECB’s quantitative easing programme was not in proportion with the bank’s mandate, was certainly a ‘big bang’. In an unprecedented statement this Friday, the European Court of Justice hit back, saying that ‘divergences between courts of the member states as to the validity of such acts would be liable to place in jeopardy the unity of the EU legal order and to detract from legal certainty'.

For the first time, we have a core European country, Germany, whose constitutional court says it’s defying the primacy of the ECJ. With its announcement today, the European Court of Justice appears to be firing a warning shot that its supremacy should not be questioned as ’national courts are required to ensure that EU law takes full effect.’

Below, I look at the German court’s decision on the validity of the ECB’s bond-buying programme. And it's now not just an economic mess but a legal one too.

And here's the written article from 5 May.