Outlook Still Unclear on ECB, ESM Challenge: German Court

Germany’s top constitutional court hasn’t decided how to proceed on challenges to the nation’s role in the European Stability Mechanism or the European Central Bank’s bond-buying announcement.

While the suits are on a list of disputes the Federal Constitutional Court intends to decide this year, no hearing has been yet been scheduled, Chief Justice Andreas Vosskuhle told reporters at a press reception in Karlsruhe yesterday.

“This is quite a big tale,” Vosskuhle said. “We’ll have to see how to handle it, that’s not quite clear yet.”

In a preliminary ruling in September, the court cleared the way for the permanent euro-area rescue fund and the European Union’s fiscal pact, rejecting bids to halt German ratification of the 500 billion-euro ($663 billion) backstop, while imposing some conditions on its use. Under the court’s procedural laws, the judges still have to render a final ruling over the issues.

Plaintiffs have since added more challenges against the ECB’s Outright Monetary Transactions program aimed at buying government bonds if necessary. A week before the September ruling, ECB President Mario Draghi announced the central bank was ready to buy unlimited quantities of short-dated government bonds of nations signed up to rescues from the ESM or European Financial Stability Facility.

While rejecting a last-minute request for an emergency injunction over the Draghi announcement, the court said at the time it would review a challenge to the ECB bond-buying programs during additional hearings in the cases.

The cases are BVerfG, 2 BvR 1390/12 et al.

-- Editors: Christopher Scinta, Peter Chapman

To contact the reporter on this story: Karin Matussek in Karlsruhe via kmatussek@bloomberg.net

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net