“With this decision, the Federal Constitutional Court has finally put to rest the constitutional dispute over the ECB’s pre-pandemic bond purchases under the PSPP. Looking back on the court’s spectacular and undeservedly much-criticised PSPP ruling, it must be acknowledged that it has done a great service to the monetary policy debate in Europe. The ECB was forced to actively address the counter-arguments against the government bond purchases and to fine-tune its communication. The court has increased the Bundestag’s awareness of its control mandate.
Today’s decision, however, will by no means end the European and constitutional dispute over bond purchases in the long term. In the pandemic, the ECB Governing Council has overturned many of the safeguards that are supposed to prevent illicit monetary state financing. The Eurosystem now buys government bonds on a highly selective basis, with an overweight on highly indebted countries. Moreover, the Eurosystem has become the most important investor in euro government bonds, without which, for example, the smooth financing of Italian government debt would be no longer possible. The ECB taking on this key role in public finance is right during the pandemic, but certainly not afterwards. In this respect, the Federal Constitutional Court will have to take on an important watchdog role in the future, if the European Court of Justice continues to maintain its largely uncritical stance.”