Judges of the German Constitutional Court (Matthias Hangst/Getty Images)
In the beginning, the eurozone crisis was a banking sector, private debt and government bond market emergency. Then economic recession, unemployment and welfare expenditure cuts took hold, propelling the growth of anti-EU, anti-establishment and anti-immigrant political movements. Now the eurozone crisis is acquiring a third dimension: one in which national constitutional courts are moving to centre stage.
True, the judges sitting on Germany’s constitutional court have been going in this direction since 2009, when they issued a judgement on the EU’s Lisbon treaty. But before the eurozone crisis erupted in full force, such rulings were fairly uncontroversial. The judges could reasonably argue in 2009 that they were simply testing if the new EU fundamental treaty was compatible with the democratic principles of Germany’s 1949 constitution, known as the Basic Law.
Now that the eurozone crisis has pushed the German government and the European Central Bank into once unimaginable measures to rescue the 17-nation currency bloc, the constitutional court has parked itself on wholly different territory. The judges would indignantly contest this, but when the court opened hearings in June into the legality of the ECB’s actions to protect the eurozone, it looked from the outside very much as if the judges had appointed themselves the supreme law lords of European integration – to the exclusion of any other EU or national legal authority. Read more
Welcome to our rolling coverage of the eurozone crisis. German judges have ruled in favour of the eurozone’s rescue plans – albeit with conditions, Dutch voters are going to the polls and Brussels publishes plans for eurozone-wide banking supervision. By Tom Burgis, John Aglionby and Ruona Agbroko on the London newsdesk with contributions by FT correspondents around the world. All times are BST.
16.51 That’s a wrap for our live coverage of a big day in the eurozone. The message of the past week seems to be: all hail the ECB. See ft.com for more news and analysis through the evening. We leave you with a last summary of the market mood from Ralph Atkins, the FT’s capital markets editor.
Markets have reacted positively to today’s news but it had largely been priced-in – the party took place last week. Spanish 10 year bond yields which have fallen by some 200 basis points since late July dropped a further six points. Spanish two year bonds were down 10 basis points. Shares rose initially, but the FTSE Eurofirst 300 index is closing more or less unchanged at 1108.0.
16.26 In Frankfurt, FT bureau chief and eurozone economics guru Michael Steen has been assessing the impact for the ECB of moving into the murky world of banking regulation.
By taking on oversight of eurozone bank supervision, the ECB can at best hope to prevent situations arising in which a bank needs to be bailed out and its depositors repaid. But, as people inside the ECB have themselves acknowledged, supervision is very far removed from the intellectual world of setting interest rates.
“When you deal with banks, you deal with politics. Automatically,” one senior ECB official said. “It’s very dangerous.”
The full piece is coming soon to ft.com/europe Read more