As Germany’s constitutional court ruled that the European Central Bank could have exceeded its powers with a massive quantitative easing (QE) effort, the EU was quick to note that European law trumps that of member states.
In Tuesday’s ruling, the Federal Constitutional Court said that the German government failed to challenge the QE programme, launched in 2015 and reactivated last year. The judges in Karlsruhe also ruled that the stimulus scheme, known as the Public Sector Purchase Program (PSPP), did not respect the “principle of proportionality,” signaling that the eurozone’s central bank went too far with its mandate.
“The ECB fails to conduct the necessary balancing of the monetary policy objective against the economic policy effects arising from the programme,” the ruling reads. “By unconditionally pursuing the PSPP’s monetary policy objective….while ignoring its economic policy effects, the ECB manifestly disregards the principle of proportionality.”