Academic journal article American University International Law Review

The Europeanmonetary Union: A Hard Test for the Rule of Lawwithin the Eu Legal System

Academic journal article American University International Law Review

The Europeanmonetary Union: A Hard Test for the Rule of Lawwithin the Eu Legal System

Article excerpt


About ten years have passed since the onset of the so-called sovereign debt crisis and the turbulence that marked the European Monetary Union ("EMU"). EMU stability still appears uncertain despite the laudable efforts made, above all, by the European Central Bank ("ECB") to prevent irreparable damage to the EMU and the agreement reached in August 2015 over the third Greek bailout; thereby avoiding Grexit and its potentially disastrous spill-over effects.

While a general reform of the economic and constitutional foundations of the European Union is advocated for many reasons, certainly the current EMU legal framework needs more than a fine tuning. As a matter of fact, in an effort to safeguard the monetary union, and with it the European Union, the overall consistency of the system has suffered from legal contrivance (bending of the rules) that has weakened the very principles of the rule of law on which the Union's legal system has been built over decades.1 This has led to tensions across European institutions, Member States, and EU and national courts.

Part II of this article tries to explain why the EMU legal framework has inherent defects and why they have passed unnoticed for many years.2 Part III analyses the main judgments pronounced by the European Court of Justice (ECJ) during the EMU crisis.3 Critical aspects of these judgments are emphasised together with a plausible "political" rationale underpinning them. Part IV assesses the EMU and the Euro Crisis from the national high courts' viewpoints and considers the implications that such domestic case-law may have had on the decisions adopted by the respective Member States' governments in trying to rescue or stabilise the EMU.4 Part V provides an analysis of the confrontation between the ECJ and the German Constitutional Court concerning the ECB's Outright Monetary Transactions ("OMT"). This confrontation recently concluded with the latter court surrendering to the ECJ's position yet claiming a non-persuasive, intrusive role of the judiciary in the fineline, dividing economic and monetary policies and competences in the EU legal system.5

This article will not discuss all the steps in the Euro Crisis6 and the medium-term measures adopted from the so-called 'Six Pack'7 to the adoption of the Fiscal Compact and the European Stability Mechanism ("ESM").8 The article will also refrain from addressing the limits to the ECB's responsibilities or on the legitimacy of initiatives that in recent years and months it has adopted, for any comment on whether the ECB has correctly enforced the powers and mission assigned to it by the Treaty on the Functioning of the European Union (TFEU) and, in particular Article 127, which has been open to diverging interpretations, would be outside the scope of this work.9

My aim here is to highlight the above referred bending of rules and the response of case law. In this way, I will suggest how such contrivances may condition possible paths to reform and the destiny of the EMU in a context of unchanged legislation.


A.Why No Adequate Legal Assessment of the EMU Rules Was Done During the 'Good Old Days' Preceding the Euro Crisis

Any analysis of the economic governance of the European Union must start with a qualitative assessment of the rules contained in the TFEU with particular emphasis on those that determined the European Monetary Union.

As jurists, perhaps, we thought that since we were talking about rules aimed at regulating predominantly economic processes and, more precisely, macroeconomic ones, our job was essentially to describe or, better still, to narrate. After all, these rules seemed connected to extremely technical (and political) issues about which we were probably ill-equipped to do what is normally expected of us, which is to read the norms rather than necessarily write them. The objective of our work should be, then, to regulate not only events in the past but, above all, those in the present and future on the basis of an analysis of foreseeable scenarios, i. …

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