"The Federal Constitutional Court can only impose restrictions on German institutions, that is the Federal Government and the Bundesbank. In this particular case, the constitutional court has stipulated that the Bundesbank may only participate in the implementation of the OMT program if the purchases are not announced, if there is a minimum period between the issue of the government bonds and their purchase, and if the bonds refer to member states that have bond market access. Moreover, the purchased bonds should only be held until maturity in exceptional cases. They should be remarketed if the intervention becomes unnecessary.
The Federal Government and the Bundesbank are required to closely monitor any implementation of the OMT program in order to detect whether there is a specific threat to the federal budget deriving from the volume and the risk structure of the purchased bonds.
Moreover, the constitutional court criticizes the justification of the European Court of Justice's (ECJ) judgement of June 16. For instance, the constitutional court writes that the ECJ has accepted the assertion of an objective in monetary policy without questioning or understanding the real underlying assumptions in detail and also without relating these assumptions to indications that are obviously inconsistent with monetary policy.
Thus, the Federal Constitutional Court defines certain limits for the participation of the Bundesbank in the ECB's OMT program. This also sends a signal to the other members of the ECB's Governing Council. However, the question arises as to what extent the constitutional court is going beyond the limits as defined by the ECB, which primarily focus on the proportionality of the measures.
In any case, the constitutional court is not copying verbatim the description of those limits from the ECJ's verdict but presents its own interpretation. For the participation of the Bundesbank and potential German plaintiffs regarding the implementation of the OMT program the interpretation of the Federal Constitutional Court is relevant. To my mind, especially the explicit restriction to states that have bond market access is relevant. If the Bundesbank should participate in OMT purchases referring to states that had no access to the bond market without these purchases, in my opinion, this would constitute a ground for a new lawsuit.
For the judges in Karlsruhe, the OMT program was a decision in a difficult environment. In view of the referendum in Great Britain they cannot break completely with the ECJ. In their dismissal they especially focused on the ECB's policy decision to announce OMT. However, the duties of the Bundesbank and the Federal Government create the basis for future legal examination of a possible implementation of the OMT program.
I would have preferred the Federal Constitutional Court to distance itself even more explicitly from the ECJ's strategy of reasoning. Particularly regarding its justification of the legitimacy of OMT for the rectification of disruptions in the monetary transmission mechanism the ECJ has given a reason that is too far-reaching and that would justify even greater interventions of the ECB impacting other aspects of economic policy. The ECJ's judgment dismantles the limitations of the ECB's monetary policy mandate."
To the study of the Kronberger Kreis: "Dismantling the Boundaries of the ECB's Monetary Policy Mandate" (PDF)