GIC Board Member, J Paul Horne’s report on the EU and the European Central Bank was published by The Financial Times and is used with permission.

A fundamental attack on the EU is implied in your report “German constitutional court to rule on ECB bond buying” (July 31). If the Karlsruhe judges decide quantitative easing constitutes “monetary financing”, explicitly forbidden by EU law and the European Central Bank statute, then the legality of the ECB’s efforts to stimulate the flagging European economy with QE would, once again, depend on the European Court of Justice reversing the German court.

Doubts about the ECB’s ability to “do whatever it takes” to boost economic growth, occurring around the time that the British government may be heading toward a hard Brexit, might well discourage both financial markets and economic growth. Even more worrying would be the German court’s implicit rejection of the basic tenet of the EU, confirmed by decades of European judicial decisions: that EU law takes precedence over national legislation, even Germany’s basic law.

Given the rising tide of nationalist populism in Europe, it is all too easy to visualise a German court decision against the ECB and implied rejection of the primacy of EU law, reinforcing the anti-EU movement and hamstringing efforts by Chancellor Angela Merkel and French president Emmanuel Macron to strengthen European integration.

Click here to view Horne’s letter in The Financial Times.

This blog post is a part of the College of Central Bankers blog series.