Thread by @lucasguttenberg

So let's take a walk through the judgment and what is implies operationally. Spoiler: It creates a lot more questions than it provides answers.

Thread:
bundesverfassungsgericht.de/SharedDocs/Ent…

1/ The main contention of the Court is that the @ecb did not assess the proportionality of PEPP. It provides a long list of possible criteria for such an assessment but stops short of claiming that PSPP is not proportional - as this would have forced it to declare PEPP illegal.

2/ Instead, it just says that PEPP is an ultra vires act because the ECB did not perform the assessment. If the ECB performs such an assessment as part of a new PSPP legal act within the next three months, the Bundesbank can continue to participate. That's doable.

3/ The question then is of course what happens once the proportionality assessment is formally there. Then, someone will legally attack this assessment. And we are back to square 1. Karlsruhe-Luxembourg-Karlsruhe, v3. Every time with more uncertainty.

4/ In the meantime, PSPP will be able to operate as it does at the moment. This is where the direct operational consequences of this judgment end.

But there is a catch: The judgment develops a number of criteria why PSPP is legal beyond the lacking proportionality assessment.

5/ These criteria are way more restrictive than the ECJ criteria. Primarily, the judgment turns the capital key and the issuance limit into hard red lines to avoid breaching the monetary financing prohibition. It also forbids any loss sharing in the context of PSPP.

6/ Question is now: How does this square with PEPP and any future ECB programmes? This judgment builds a very broad bridge for those who brought legal action against PSPP to do so also against PEPP. It is completely unclear to what extent the criteria developed here will apply.

7/ So this judgment predictably will create two new law suits: One against the new PSPP legal act, one against PEPP. Maybe Karlsruhe will again ask Luxembourg, maybe it will not. Maybe it again resorts to a procedural question, maybe not. We just don't know.

8/ And so we only know one thing with certainty: This will never end. Karlsruhe wants a seat at the table of ECB policymaking. And consequently, we will never be sure how far the ECB can really go and what an ECJ judgment is worth in this context. This is not a tenable situation.

9/ Which leads me to my very predictable conclusion: We cannot build our entire crisis management on the ECB doing the heavy lifting. This is the moment for politicians to step up.

Of course it would have forced it to declare *PSPP* illegal.