Germany's constitutional court has given the European Central Bank three months to justify bond purchases under its stimulus programme or lose the Bundesbank as a participant, threatening the scheme and the euro’s future.
The verdict has dealt a blow to the €2trn purchase scheme that has kept the eurozone intact since the debt crisis. It now threatens plans for a Eurozone €750bn Coronavirus aid programme. The court decision is being watched closely by financial markets. After the announcement, the euro fell to $1.0889 and Eurozone debt ratings also fell.
This bullying tactic by the court is a Donald Trump-style move that could have serious consequences for economic cohesion within the Eurozone. When Trump withdrew funding from the World Health Organization, German authorities were among the first to criticise. Now, using the financial muscle of the Bundesbank, the highest court in Germany is threatening to do the same with the ECB. This raises the ghost of German-led austerity policies that followed the financial crash in 2008. That must not be allowed to happen.