The German Constitutional Court and Central Bank Independence

Abstract

The judgement of the German Federal Constitutional Court of May 5 2020 on the the ECB's Public Sector Purchase Programme raises important questions about central banks generally: What is the proper role of central banks? Who, if anyone, should oversee central banks, and in that context, what is the appropriate role of courts? Does such oversight undermine the independence of central banks? The judgement has the merit of putting a spotlight on these fundamental questions, which will be analyzed in this paper. This paper is structured into three parts. The first section provides some background on the European Central Bank and the European System of Central Banks and their response to the euro area crisis from 2010 onwards, with a focus on the PSPP. The second section provides an overview of the German Federal Constitutional Court judgements on the OMT and the PSPP. It will highlight important features of the Federal Constitutional Court’s remedies applied to the ECB, in particular the ultra vires review, identity control and overall budgetary responsibility of the German Bundestag. The third section assesses what the judgement of May 5 means for the ECB’s and the Bundesbank’s independence, and concludes with some thoughts on the standard of review.