C-62/14 Gauweiler and Others v Deutscher Bundestag [2015]
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C-62/14 Gauweiler and Others v Deutscher Bundestag [2015] is a notable EU law case concerning the legality of the European Central Bank's (ECB) Outright Monetary Transactions (OMT) programme. The case played a significant role in the context of banking law and was considered essential for stabilising the Eurozone during a period of financial turmoil.
The German Constitutional Court sought clarification from the Court of Justice of the European Union (CJEU) on the legality of the ECB's announcement of the OMT programme. This programme involved the ECB buying government bonds on secondary markets as a measure to address financial turmoil within the Eurozone. The inquiry raised questions about whether the programme constituted economic policy rather than monetary policy and whether it violated the prohibition of monetary financing for member states under TFEU Article 123(1). The challenge stemmed from concerns raised by a German politician, Peter Gauweiler, regarding the assistance provided to non-German Eurozone member states facing financial difficulties.
Advocate General Cruz Villalon provided an opinion supporting the EU policy. The Grand Chamber of the CJEU ultimately held that the ECB could adopt the OMT programme within the framework of its monetary policy powers. The judgment specified that the programme was consistent with TFEU Articles 119, 123, 127, and articles 17 to 24 of Protocol (No 4) on the Statute of the European System of Central Banks and of the ECB.
The CJEU highlighted that the OMT programme was indeed a monetary policy measure and emphasised the need for sufficient safeguards to prevent a violation of the prohibition of monetary financing under Article 123(1) TFEU. The intervention by the European System of Central Banks (ESCB) in purchasing government bonds on secondary markets was deemed indirect and not equivalent to a direct measure granting financial assistance to a member state.
However, the judgment acknowledged the potential for the ESCB's intervention to have an effect equivalent to a direct purchase if market participants knew about it in advance. To address this concern, the ECB outlined conditions intended to ensure that the ESCB's intervention on secondary markets would not have an effect equivalent to a direct purchase of government bonds on the primary market.
In essence, the CJEU ruled that the OMT programme, as announced by the ECB, fell within the scope of monetary policy and complied with EU law, provided certain safeguards were in place to prevent a breach of the prohibition on monetary financing.
The German Constitutional Court sought clarification from the Court of Justice of the European Union (CJEU) on the legality of the ECB's announcement of the OMT programme. This programme involved the ECB buying government bonds on secondary markets as a measure to address financial turmoil within the Eurozone. The inquiry raised questions about whether the programme constituted economic policy rather than monetary policy and whether it violated the prohibition of monetary financing for member states under TFEU Article 123(1). The challenge stemmed from concerns raised by a German politician, Peter Gauweiler, regarding the assistance provided to non-German Eurozone member states facing financial difficulties.
Advocate General Cruz Villalon provided an opinion supporting the EU policy. The Grand Chamber of the CJEU ultimately held that the ECB could adopt the OMT programme within the framework of its monetary policy powers. The judgment specified that the programme was consistent with TFEU Articles 119, 123, 127, and articles 17 to 24 of Protocol (No 4) on the Statute of the European System of Central Banks and of the ECB.
The CJEU highlighted that the OMT programme was indeed a monetary policy measure and emphasised the need for sufficient safeguards to prevent a violation of the prohibition of monetary financing under Article 123(1) TFEU. The intervention by the European System of Central Banks (ESCB) in purchasing government bonds on secondary markets was deemed indirect and not equivalent to a direct measure granting financial assistance to a member state.
However, the judgment acknowledged the potential for the ESCB's intervention to have an effect equivalent to a direct purchase if market participants knew about it in advance. To address this concern, the ECB outlined conditions intended to ensure that the ESCB's intervention on secondary markets would not have an effect equivalent to a direct purchase of government bonds on the primary market.
In essence, the CJEU ruled that the OMT programme, as announced by the ECB, fell within the scope of monetary policy and complied with EU law, provided certain safeguards were in place to prevent a breach of the prohibition on monetary financing.
