Bloomberg View: The Case for a German Referendum on the Euro

The euro dodged another bullet with the Sept. 12 decision by Germany’s constitutional court not to block the creation of a European Stability Mechanism, the latest just-in-time measure by the Continent’s leaders to save the currency. That’s good news, but it’s not enough.

The constitutional court placed a heavy condition on its approval of the ESM’s ratification by Germany. Any action by the fund that would increase German liability, beyond the country’s €190 billion capital commitment, would now require German parliamentary approval. That’s a high hurdle that German Chancellor Angela Merkel will try to avoid because her party has proved reluctant to make such politically unpopular moves. If the €500 billion fund doesn’t look big enough at any point, that will perpetuate uncertainty in financial markets over whether Europe will do what’s needed to underwrite Greece, Italy, Portugal, or Spain.