In its ruling last May, the German court found in favor of the complainants, ruling the government and Bundestag had violated their rights under Germany’s Basic Law by failing to take steps to challenge the fact that the ECB, in its decisions on the adoption and implementation of the PSPP, neither assessed nor substantiated that the measures provided for in those decisions satisfied the principle of proportionality. Following that ruling, the German court conducted a hearing in 2019 on the complaints. In 2017, the German court referred several questions to the European Court of Justice for a preliminary ruling and in 2018 the ECJ ruled the PSPP neither exceeded the ECB’s mandate nor violated the prohibition of monetary financing. More than 1,700 German citizens filed complaints before the German court alleging the PSPP violated several provisions in the EU’s treaties-most notably, those prohibiting the monetary financing of EU deficits and defining the ECB’s mandate in regard to monetary policy-and alleging, also, that the German government and parliament had failed to act with respect to Bundesbank participation in the program. Intended to run through September 2016, the PSPP was extended several times and by 2020 the purchases amounted to €2.2 trillion. The purchases were distributed in accordance with the subscription key of the ECB’s capital, with the central banks holding 90 percent of the book value of the purchases and the ECB 10 percent. In the PSPP, created in March 2015, the central banks of the members of the euro area purchased government bonds or other marketable debt issued by the central, regional, and local authorities within their jurisdictions as well as securities issued by international organizations and multilateral development banks. In addition to raising fundamental constitutional questions about the relationship between national law and EU law and between national courts and the EU institutions, the ruling placed a large question mark not only over the PSPP but also over the new Pandemic Emergency Purchase Programme (PEPP) announced two months earlier by European Central Bank President Christine Lagarde under which the ECB would purchase up to €750 billion-subsequently increased to €1.35 trillion-of private and public debt through at least the first half of 2021.

On May 5, 2020, the German Federal Constitutional Court issued a ruling in regard to the European Central Bank’s Public Sector Asset Purchase Programme (PSPP) that sent shock waves through the EU.

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