Germany’s top court clashes with European Central Bank in revolutionary ruling

The German court decision threatens to undermine confidence in the euro and kills off any hope of eurobonds or joint debt issuance

Germany’s top court has fired a cannon shot across the bows of the European Central Bank and accused the European Court of breaching EU treaty law, marking an epic clash of rival judicial supremacy.

In an explosive judgement, the German constitutional court ruled that the ECB had exceeded its legal mandate and “manifestly” breached the principle of proportionality with mass bond purchases, now topping €2.2 trillion and set to rise dramatically. The bank had strayed from the monetary realm into broad economic policy-making. 

The court said the German Bundesbank may continue to buy bonds during a three-month transition but must then desist from any further role in the “implementation and execution” of the offending measures, until the ECB can justify its actions and meet the court’s objections. It also said the Bundesbank must clarify how it is going to sell the bonds it already owns. 

“For the first time in history, the constitutional court has found that the actions and decisions of European bodies overstep their legitimate competence, and therefore have no validity in Germany,” said the court’s president, Andreas Vosskuhle. 

No country has dared to do this before since the creation of the Community in 1957. It is a revolutionary moment for the European project.