The Federal Constitutional Court in Karlsruhe dismissed motions that sought to block the European Stability Mechanism, while ruling Germany’s 190 billion-euro contribution can’t be increased without legislative approval. The court said Germany can ratify the ESM if it includes binding caveats that it won’t be forced to assume higher liabilities without its consent.
“No permanent mechanisms may be created under international treaties which are tantamount to accepting liability for decisions by the will of other states, above all if they entail consequences which are hard to calculate,” the eight judges wrote.
The ESM treaty must be interpreted as banning the fund from borrowing from the ECB or depositing bonds as collateral, the court said, because EU law doesn’t permit the central bank to buy government bonds on the secondary market with the intention of financing EU member state budgets independently of the capital markets
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