Hostname: page-component-8448b6f56d-42gr6 Total loading time: 0 Render date: 2024-04-19T22:28:06.727Z Has data issue: false hasContentIssue false
  • English
  • Français

Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review

Published online by Cambridge University Press:  06 March 2019

Matthias Goldmann

Extract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

In Karlsruhe's recent request for a preliminary ruling, an unconventional monetary policy measure of the European Central Bank (ECB) finds an unconventional judicial response. Based on its mandate to enforce the fundamental right to vote, the Federal Constitutional Court (FCC) leaves no doubt about its view that the ECB's Outright Monetary Transactions Programme (OMT Programme) violates the law of the European Union and hence the German Basic Law, unless one reads them in a rather restrictive way. But as unconventional monetary policy steps up the need for the ECB to justify the legality of its measures, so does the FCC's unconventional expansion of the scope of judicial review raise questions which the recent decision in its—generally laudable—brevity leaves underexplored. In particular, the decision does not dwell much on the issue whether it is appropriate for a court to review issues of monetary policy, and which standard of review should apply. Only Judge Gerhardt calls the majority's standard of review into question when he doubts whether the requirement for transgressions of the European Union's competences to be “manifest” is a workable criterion for defining the scope of the FCC's ultra vires control.

Type
Research Article
Information
German Law Journal , Volume 15 , Issue 2: Special issue - The OMT Decision of the German Federal Constitutional Court , 01 March 2014 , pp. 265 - 280
Copyright
Copyright © 2014 by German Law Journal GbR 

References

1 Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 2 BvR 2728/13 (Jan. 14, 2014), http://www.bundesverfassungsgericht.de/entscheidungen/rs20140114_2bvr272813en.html [hereinafter OMT Ruling].Google Scholar

2 Grundgesetz Für Die Bundesrepublik Deutschland [Grundgesetz] [GG] [Basic Law], May 23, 1949, Art. 38 (Ger.).Google Scholar

3 See Press Release, European Cent. Bank, Technical Features of Outright Monetary Transactions (Sep. 6, 2012), http://www.ecb.europa.eu/press/pr/date/2012/html/pr120906_1.en.html.Google Scholar

4 OMT Ruling at paras. 16–17 (Gerhardt, J., dissenting).Google Scholar

5 See infra Part B.Google Scholar

6 See infra Part C.Google Scholar

7 See infra Part D.Google Scholar

8 See infra Part B.I.Google Scholar

9 See infra Part B.II.Google Scholar

10 See infra Part B.III.Google Scholar

11 See OMT Ruling at paras. 59–60.Google Scholar

12 See Bundesbankgesetz [BBankG] [Bundesbank Act], Oct. 22, 1992, Bundesgesetzblatt at § 12 (Ger.).Google Scholar

13 Ulrich Häde, Jenseits der Effizienz: Wer kontrolliert die Kontrolleure? 662, 664 (2011).Google Scholar

14 Cf. Federal Reserve Act, 12 U.S.C. § 225a (obliging the Open Market Committee to pursue the goals of maximum employment, stable prices, and moderate long-term interest rates).Google Scholar

15 E.g., Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 2 BvR 1877/97, 97 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 350 (Mar. 31, 1998).Google Scholar

16 Schulze-Fielitz, Helmuth, Art. 20 (Rechtsstaat), in Grundgesetz-Kommentar 2 170, paras. 113–118 (Horst Dreier ed., 2d ed. 2006).Google Scholar

17 Hahn, Hugo J. & Häde, Ulrich, Währungsrecht § 20 para. 3 (2d ed. 2010).Google Scholar

18 Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 2 BvR 2134/92, 2 BvR 2159/92, 89 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 155 (Oct. 12, 1993). The FCC considers this qualification to be in line with Article 79(3) of the Basic Law, which guarantees the concept of democracy in perpetuity. See also Ingolf Pernice, Art. 88, in Grundgesetz-Kommentar 3 316, para. 28 (Horst Dreier ed., 2d ed. 2008).Google Scholar

19 See OMT Ruling at para. 59 (“The independence which the European Central Banks and the national central banks enjoy … diverges from the requirements the Basic Law states with regard to the democratic legitimation of political decisions.”) (emphasis added); Gaitanides, Charlotte, Das Recht der Europäischen Zentralbank 213–14 (2005).Google Scholar

20 This follows from the practice of judicial reasoning. With respect to international courts, see Armin von Bogdandy & Ingo Venzke, In wessen Namen? 146–50 (2014).Google Scholar

21 E.g., Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 1 BvL 20/73, 1 BvL 21/73, 1 BvL 22/73, 1 BvL 23/73, 1 BvL 24/73, 39 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 210 (Mar. 19, 1975) (Mühlenstrukturgesetz); Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 1 BvR 532, 533/77, 419/78, 50 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 290 (Mar. 1, 1979) (employee co-determination); Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 2 BvF 1/01, 107 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 62 (Oct. 25, 2002) (Altenpflegegesetz).Google Scholar

22 See OMT Ruling at para. 28 (Lübbe-Wolff, J., dissenting).Google Scholar

23 OMT Ruling at para. 17 (Gerhardt, J., dissenting).Google Scholar

24 Pringle v. Ireland, CJEU Case C-370/12, para. 53 (Nov. 27, 2012), http://curia.europa.eu/juris/recherche.jsf?language=en.Google Scholar

25 Eur. Cent. Bank, Monthly Bulletin (Sep. 2012), available at http://www.ecb.europa.eu/pub/pdf/mobu/mb201209en.pdf. Previously, the ECB understood price stability as “a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the euro area of below 2%.” Press Release, European Cent. Bank, A Stability-Oriented Monetary Policy Strategy for the ESCB (Oct. 13 1998), http://www.ecb.europa.eu/press/pr/date/1998/html/pr981013_1.en.html.Google Scholar

26 Blanchard, Olivier et al., Int'l Monetary Fund Staff Position Note, Rethinking Macroeconomic Policy (2010); Hufbauer, Gary & Xie, Daniel Danxia, Financial Stability and Monetary Policy: Need for International Surveillance, in Int'l Law in Fin. Regulation and Monetary Affairs 382, 385 (Thomas Cottier et al. eds., 2012).Google Scholar

27 Tinbergen, Jan, Centralization and Decentralization in Economic Policy 75 (1954); Tinbergen's approach as such is not necessarily incompatible with the interdependence theorem discussed in the following paragraph, see Tinbergen, Jan, Economic Policy: Principles and Design 218 et seq. (1956).Google Scholar

28 Friedman, Milton, A Program for Monetary Stability 77 et seq. (1959).Google Scholar

29 Friedman, Milton, Capitalism and Freedom 51–54 (2002).Google Scholar

30 Taylor, John B., Discretion versus Policy Rules in Practice, 39 Carnegie-Rochester Conference Series on Public Policy 195–214 (1993).Google Scholar

31 With respect to the programme preceding OMT, see Belke, Ansgar, Driven by the Markets? ECB Sovereign Bond Purchases and the Securities Markets Programme, 45 Intereconomics: Rev. of Eur. Econ. Pol'y 357 (2010); Meyer, Dirk, Kosten des Europäischen Finanzstabilisierungsmechanismus (EFSM) aus deutscher Sicht, 231 J. Econ. & Stat. 288, 292–94 (2011).Google Scholar

32 Sester, Peter, Plädoyer für die Rechtmäßigkeit der EZB-Rettungspolitik, 59 Recht der Internationalen Wirtschaft 451, 452 (2013).Google Scholar

33 Brookings Institution, The Comm. on Int'l Econ. Policy and Reform, Rethinking Central Banking (2011); Blanchard, , supra note 26.Google Scholar

34 Brookings Institution, supra note 33, at 5–7; Hufbauer & Xie, supra note 26, at 384.Google Scholar

35 Mishkin, Frederic S., The Channels of Monetary Transmission: Lessons for Monetary Policy 9 et seq. (Nat'l Bureau of Econ. Research, Working Paper No. 5464, 1996).Google Scholar

36 Brookings Institution, supra note 33, at 7, 10; Hufbauer & Xie, supra note 26, at 395; Blanchard, supra note 26, at 11–13.Google Scholar

37 See Lastra, Rosa M., The Evolution of the European Central Bank, 35 Fordham Int'l L.J. 1260–1281, 1276 (2012).Google Scholar

38 In favor of this, see Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 2 BvR 1390, 1421, 1438, 1439, 1440/12, 132 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 195, 268 (Jul. 10, 2012) (ESM Provisional Measures); Hattenberger, Doris, Art. 123 AEUV, in EU-Kommentar 1531, para. 6 (Jürgen Schwarze ed., 3rd ed. 2012); Against, see Häde, Ulrich, Art. 123 AEUV, in EUV—AEUV Kommentar 1585, para. 10 (Christian Calliess & Matthias Ruffert eds., 4th ed. 2011).Google Scholar

39 Cf. OMT Ruling at para. 17 (Gerhardt, J., dissenting).Google Scholar

40 Herrmann, Christoph, Die Bewältigung der Euro-Staatsschulden-Krise an den Grenzen des deutschen und europäischen Währungsverfassungsrechts, Eur. J. Econ. L. 805, 810–11 (2012).Google Scholar

41 Konrad, Kai A. et al., Bundesverfassungsgericht und Krisenpolitik der EZB — Stellungnahmen der Ökonomen, 93 Wirtschaftsdienst 431–454 (2013).Google Scholar

42 Hahn, & Häde, supra note 17, § 17 para. 34.Google Scholar

43 Dworkin, Ronald, Taking Rights Seriously 81, 116 (1977).Google Scholar

44 Ely, John Hart, Democracy and Distrust 87–88 (1980).Google Scholar

45 Habermas, Jürgen, Faktizität und Geltung 272 (1992).Google Scholar

46 Michelman, Frank I., Law's Republic, 97 Yale L.J. 1493, 1526–7 (1988).Google Scholar

47 Sunstein, Cass, Interest Groups in American Public Law, 38 Stan. L. Rev. 29, 56, 78 (1985).Google Scholar

48 On the difference between law-generating and law-applying discourses, see Habermas, supra note 45, at 212.Google Scholar

49 Habermas, , supra note 45, at 187, 343.Google Scholar

50 Id. at 347, 361.Google Scholar

51 Id. at 208.Google Scholar

52 E.g., Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 1 BvL 5/64, 25 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 1, 17 (Dec. 18, 1968) (Mühlengesetz). On the constitutional significance of consistency checks as part of rationality checks, see Petersen, Niels, Gesetzgeberische Inkonsistenz als Beweiszeichen. Eine rechtsvergleichende Analyse der Funktion von Konsistenzargumenten in der Rechtsprechung, 138 Archiv des öffentlichen Rechts 108–34, 114–17 (2013).Google Scholar

53 E.g., Bundesverfassungsgericht [BVerfG - Federal Constitutional Court], Case No. 1 BvL 1, 3, 4/09, 125 Entscheidungen des Bundesverfassungsgerichts [BVerfGE] 175, 225 (Feb. 9, 2010) [hereinafter Hartz IV]. Criticizing the court and advocating a review limited to procedure, see Dann, Philipp, Verfassungsgerichtliche Kontrolle gesetzgeberischer Rationalität, 49 Der Staat 630–646 (2010).Google Scholar

54 See Hartz IV at 235–6.Google Scholar

55 See Hartz IV at 231.Google Scholar

56 See Hartz IV at 233.Google Scholar

57 See OMT Ruling at para. 64.Google Scholar

58 Cf. Pringle, CJEU Case C-370/12 at paras. 56, 57.Google Scholar

59 Cf. Kerber, Markus C. & Städter, Stefan, Die EZB in der Krise: Unabhängigkeit und Rechtsbindung als Spannungsverhältnis, 22 Eur. J. Econ. L. 536, 536–7 (2011); Forkel, Hans-Walter, Zur Frage des Rechtsschutzes für jedermann gegen die Geldpolitik der EZB, Zeitschrift für Rechtspolitik 240, 241 (2012).Google Scholar

60 Häde, Ulrich, Art. 127, in EUV—AEUV Kommentar 1618, para. 6 (C. Calliess & M. Ruffert eds., 4th ed. 2011).Google Scholar

61 Hermann, Christoph, EZB-Programm für die Kapitalmärkte verstößt nicht gegen die Verträge—Erwiderung auf Martin Seidel, 21 Eur. J. Econ. L. 645, 646 (2010); Fratzscher, Marcel, Zum währungspolitischen Mandat der EZB und möglichen Auswirkungen von Maßnahmen der EZB auf die nationalen Haushalte, in Wirtschaftsdienst: Zeitschrift für Wirtschaftspolitik 445–451, 447.Google Scholar

62 Matthes, Jürgen & Demary, Markus, Überschreitet die EZB mit ihren Staatsanleihekäufen ihr Mandat?, 93 Wirtschaftsdienst 607–615 (2013).Google Scholar

63 Fratzscher, , supra note 61.Google Scholar

64 Hence, whether price stability is an absolute or a relative concept is a rather academic question. Cf. Gaitanides, supra note 19, at 17–18.Google Scholar

65 OMT Ruling at para. 71.Google Scholar

66 Id. at para. 95ff.Google Scholar

67 Id. at para. 73.Google Scholar

68 Making the case for liquidity concerns (irrational credit crunch), see Al-Eyd, Ali & Berkmen, S. Pelin, Fragmentation and Monetary Policy in the Euro Area (Int'l Monetary Fund, Working Paper No. 13/208, 2013); suggesting that solvency might have been the issue for the preceding SMP Programme, see Trebesch, Christoph & Zettelmeyer, Jeromin, Deciphering the ECB Securities Markets Programme: The Case of Greek Bonds (2012) (unpublished manuscript) (on file with author).Google Scholar

69 Deutsche Bundesbank, Stellungnahme gegenüber dem Bundesverfassungsgericht zu den Verfahren mit den Az. 2 BvR 1390/12 et al. 7 (Dec. 21 2012), available at http://www.handelsblatt.com/downloads/8124832/1/stellungnahme-bundesbank_handelsblatt-online.pdf.Google Scholar

70 See OMT Ruling at para. 72.Google Scholar

71 Conversely, this implies, as the Bundesbank has pointed out, that the ECB may not defend the integrity of the Eurozone by all means. Bundesbank, Deutsche, supra note 69, at 9.Google Scholar

72 Sester, supra note 32, at 455.Google Scholar

73 Cf. Commission Regulation 472/2013, Of the European Parliament and of the Council on the Strengthening of Economic and Budgetary Surveillance of Member States in the Euro Area Experiencing or Threatened with Serious Difficulties with Respect to their Financial Stability, 2013 O.J. (L 140) 3, 7.Google Scholar

74 See OMT Ruling at para. 74.Google Scholar

75 Sester, Peter, The ECB's Controversial Securities Market Programme (SMP) and its Role in Relation to the Modified EFSF and the Future ESM, 9 Eur. Company and Fin. L. Rev. 156, 158–9 (2012); Deutsche Bundesbank, supra note 69, at 14.Google Scholar

76 But see OMT Ruling at para. 79.Google Scholar

77 See supra note 38 and accompanying text.Google Scholar

78 Herrmann, , supra note 40, at 810.Google Scholar

79 OMT Ruling at paras. 83, 88–89.Google Scholar

80 Decision of the European Central Bank of 14 May 2010 establishing a securities markets programme. ECB 2010/5, 2010 O.J. (L 124) 8.Google Scholar

81 Wyplosz, Charles, ECB's Outright Monetary Transactions, European Parliament 7 (Directorate General for Internal Policies, Working Paper IP/A/ECON/NT/2012–05, 2012).Google Scholar

82 Sester, , supra note 75, at 158.Google Scholar

83 But see Deutsche Bundesbank, supra note 69, at 17.Google Scholar

84 On the meaning of ECB and national central bank independence, see Convergence Report, European Central Bank 21 (2012), available at http://www.ecb.europa.eu/pub/pdf/conrep/cr201205en.pdf (listing functional, institutional, personal and financial independence).Google Scholar

85 E.g., Fratzscher, Marcel et al., A Call for Support for the European Central Bank's OMT Programme, DIW Berlin (Jul. 19, 2013), https://berlinoeconomicus.diw.de/monetarypolicy/a-call-for-support-for-the-european-central-banks-omt-programme/.Google Scholar