No. 91 - The German Federal Constitutional Court and the Banking Union

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by Raffaele D'Ambrosio and Donato MessineoMarch 2021

This Quaderno examines from different perspectives the reasoning followed by the Bundesverfassungsgericht (BVerfG) in order to resolve the inconsistency between both the SSM and SRM regulations and the German constitutional order, in the context of its case-law on the criteria for reviewing the constitutionality of EU acts and the dialogue with the Court of Justice of the European Union (CJEU).

According to the BVerfG, the SSM and SRM regulations are not incompatible with the German constitution, as they provide a comprehensive framework of accountability mechanisms that makes the transfer of competences from the Member States to independent EU authorities (the ECB and the Single Resolution Board-SRB) constitutionally acceptable. However, both the regulations must be interpreted strictly.

The BVerfG reaches these conclusions, which are reviewed in detail in this book, by applying the patterns of ultra vires and identity checks of Union acts, which have already been followed in previous rulings. In spite of its europarechtsfreundlich orientation, the BVerfG avoids to enter into a dialogue with the CJEU about the correct interpretation of the rules of the SSM Regulation on the allocation of tasks between the ECB and the NCAs, even though the BVerfG and the CJEU have different views on this topic. In this book, it is argued that such a choice might be considered even more dangerous than an explicit refusal to apply EU law.

The judgment pays particular attention to the control of legality as a substitute for the democratic principle. Nevertheless, in this Quaderno doubts are raised as to whether the former can effectively represent a substitute measure for the latter, since the control of legality is not suitable for establishing the democratic legitimacy of fundamental and at the same time complex political choices, such as some of those entrusted to the SRB by the EU legislature.

The BVerfG’s judgment also deals with the legal basis for the contributions to the Single Resolution Fund (SRF), which, in the Court’s view, is not the SRM regulation but the national law and the intergovernmental agreement on the SRF. Against this background, the BVerfG rejects the objection of unconstitutionality of the SRM Regulation in this respect as well, but it stops short of seriously examining whether Article 114 TFEU could be the primary legal source of the imposition of the obligation contained in the SRM regulation to collect contributions to the SRF.

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