The Future of the Euro is in Question Now

Posted Friday, May 8, 2020 by
Skerdian Meta • 2 min read
The German Constitutional Court ruled earlier this week against the big monetary programme by the ECB. Germans have always been against monetary spending, but now these relief programmmes from the ECB due to coronavirus are vital. But, Germans always want their own way, so this is sort of like the first shot being fired in this declaration of war. If the narrative starts to grow from here, it could mean serious issues and complications being posed to the whole idea of the euro itself.

Comments From Ex-German Finance Minister, Wolfgang Schaeuble

  • It is very possible the existence of the euro is now put into question
  • Because every national constitutional court can decide for itself
  • The situation makes nobody happy
  • It is difficult if the German court cannot accept the ECJ decision
  • But it is also not easy to refute the German decision

This is going to be a key risk factor to consider for the single currency in the bigger picture as we continue to navigate through these testing times. Although, I think that this virus outbreak, followed by the house arrest of the entire continent and the economic meltdown, will eventually lead to the collapse of the EU. Italy will be on the way out soon and France will probably follow. The ECB responded earlier to the German Constitutional Court as below:

“The Governing Council received a preliminary briefing by the governor of the Bundesbank and by the legal department of the European Central Bank (ECB). The ECB takes note of today’s judgment by the German Federal Constitutional Court regarding the Public Sector Purchase Programme (PSPP).

The Governing Council remains fully committed to doing everything necessary within its mandate to ensure that inflation rises to levels consistent with its medium-term aim and that the monetary policy action taken in pursuit of the objective of maintaining price stability is transmitted to all parts of the economy and to all jurisdictions of the euro area.

The Court of Justice of the European Union ruled in December 2018 that the ECB is acting within its price stability mandate.”

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