25 November 2024
The European Banking Union Also Means Cross-Border Bank Consolidation
A heated debate on the risks of EU’s unfinished-effort to establish a Banking Union erupted on 11 September 2024, when the Milan-based UniCredit announced that it had amassed an equity stake of 9% in the Frankfurt-based rival Commerzbank. The German Chancellor quickly labelled UniCredit’s move an “unfriendly attack,” adding that the acquisition of Commerzbank is a threat to German financial stability. We argue that German authorities can hardly provide a legally-compelling justification to convince the ECB to reject UniCredit’s request on financial stability grounds. Continue reading >>
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25 November 2021
The ECB Cannot Ignore its Secondary Mandate
The EU Treaties oblige the European Central Bank to support the broader economic policies in the EU. Yet, the ECB has long ignored this part of its mandate. In the recently concluded monetary policy strategy review it only gets a brief mention. As we argue in a new report, this neglect of the ECB’s secondary mandate is illegal and should end as soon as possible. Continue reading >>17 December 2020
The Inviolability of National Centrals Banks as a Matter of EU Law
National authorities have to be extremely cautious in their dealings with National Central Banks in national investigations. Given the role of those in EU law, and their place within the EU legal order, today's judgment of the European Court of Justice should be seen as a stern warning to investigative authorities of the Member States. They must engage with the applicable EU institutions, prior to seizing documents of National Central Banks. Continue reading >>16 November 2020
Greening Banks in the Face of Uncertainty
To this day, banks continue to plough money into carbon-intensive sectors of the economy while making inadequate provisions for potential losses. The European Central Bank’s 2020 draft Guide on climate-related and environmental risks is a major step in supervisory efforts to address this problem, which so far has escaped critical scrutiny. It sets out how the ECB will use its supervisory powers to get banks to properly monitor, disclose and price risk. As we argue, its current approach is unlikely to work because it asks banks to quantify risks that often resist simple quantification. Instead, the ECB should provide banks with more targeted guidance. That will make banking supervision more political than it is today. Continue reading >>
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19 May 2020
VB Live: “Whatever it takes?” – COVID-19 as an (existential) crisis for the European Union
Session II of our discussion series on the COVID-19 crisis from a German, European and International Perspective, jointly organized by IFHV and Verfassungsblog - streamed live here on Verfassungsblog from 4:00 - 5:45 pm. Join now! Continue reading >>18 May 2020
Germany’s Failing Court
The German Federal Constitutional Court’s PSPP judgment depends on three intricate principles that the Court says are implicit in the German constitution, to such an extent that they are ‘unamendable’ under the ‘eternity’ clause of Article 79. These principles, however, are unique to Germany and unfamiliar in other European jurisdictions. Thereby the German Court has taken a ultimately illegitimate turn towards a narrow and inward interpretation of its constitution, which inexplicably neglects its European dimension. Given the potential effects of Germany’s apparent defiance of EU law and in light of the current ongoing discussions about the desired increased burden-sharing among the winners and losers of the Eurozone, the internal constitutional argument in Germany is a matter of great significance for the future of the Eurozone. Continue reading >>15 May 2020
At the End of the Law
The recent judgment of the Federal Constitutional Court needs to be regarded from the perspective of political economy as it highlights that the status quo of the Eurozone is untenable. The merits of the Weiss judgment could be to open up a debate about the requirements of a genuine European Economic and Monetary Union in Germany and elsewhere in Europe. Continue reading >>13 May 2020
Is it a Dance or is it Chicken?
I cut my teeth studying the German Constitutional Court’s relationship with the European Court of Justice. A recent article in the Financial Times used the metaphor of a dance to explain the GCC’s history of pushing back against the ECJ’s authority. In 2001, I called it a game of chicken. I don’t worry that playing chicken with the ECJ inevitably leads to European disintegration. The GCC’s ECB ruling is, however, the wrong decision issued at the wrong time. Economic policy-makers will and should ignore the ruling, and for this reason I expect the GCC to step back from the brink, once again. But harm is nonetheless being inflicted on a tottering global economy, a fragile European project, and a disintegrating popular support for the rule of law. Continue reading >>06 May 2020
Fight, flight or fudge?
Karlsruhe’s latest judgement on the PSPP moves the German state closer to a full-fledged fight with either the EU or its own Constitutional Court by threatening to prohibit Germany’s participation in a programme that has existential significance for the euro. To resolve this dilemma, perhaps nothing short of a revolutionary moment would be required. Continue reading >>06 May 2020