LAUSR

Abstract The relationship between the European Union (EU) and its member states has recently been the subject of several legal proceedings in the German Federal Constitutional Court (GFCC) and the European Court of Justice. The backdrop to the underlying controversies were policies instituted by the European Central Bank (ECB) dealing with the economic and monetary situation in various member states in the context of the sovereign debt crises to influence interest rates, combat deflationary tendencies and keep inflation under but close to the ECB’s 2% inflation target. Especially so-called outright monetary transactions (OMTs) and the corresponding OMT-program and a particular high volume public sector asset purchasing program (PSPP) announced by the ECB have been controversially discussed. Legally, the controversies are about the prohibition for the ECB to finance debt held by the EU or member states (Article 123 TFEU) and about the delineation of economic policy (Article 119 et seq. TFEU), which lies in the hands of the members states, and monetary policy (Article 127 et seq. TFEU), which is exclusively in the hands of the ECB. The GFCC in its decisions propagated a restrictive approach emphasizing the role of the member states and pointing to the doctrines developed by it around ultra vires acts and so-called identity review. This paper attempts to shed some light on this controversy and argues that beyond the legal controversy lies a deeper problem of the relationship between judicial and political decision-making that the GFCC should exercise restraint in exercising its functions and remember its own doctrine of “open constitutional norms” developed in a different context but applicable here as well.