Experts have warned that a ruling by the German constitutional court on the European Central Bank (ECB) could lead to the breakup of the euro currency.
Guntram Wolff, chief of the think tank Bruegel, is one of the experts to sound the alarm over the German court’s ruling, labelling it “dangerous” and saying it affected “the entire EU legal order but also the ECB’s functioning”.
The German court rejected earlier this month a programme by the ECB to buy several trillions of euros worth of government bonds to combat inflation, saying the bank would need to prove the bond-buying was necessary and proportionate.
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If the bank does not prove to the German court that the buying is proportionate within three months, Germany’s central bank, the Bundesbank, will stop purchasing bonds under the ECB’s stimulus programme.
“Then we have a full-scale crisis and conflict,” Guntramm Wolff told Swedish broadcaster Sveriges Radio on Tuesday.
Professor of European law at Uppsala University Carl Fredrik Bergström claimed the judgement could instead allow the European Court of Justice to rule in the matter and said in the long-term it could give strength to the European Union’s legal system.
Wolff is just the latest expert to predict dark days ahead for the euro. In March, Belgian economist Professor Paul De Grauwe said that a lack of solidarity in the political bloc regarding the Wuhan coronavirus outbreak could lead to the break up of the union.
“If I were Italian and if I saw that other countries are not willing to help Italy, I would question membership in the Union,” he said.
Desmond Lachman, an analyst at the American Enterprise Institute, added: “After all, being a founding member of the euro and the third member of the eurozone, the euro could not survive without Italy.”
French economist Jean-Paul Fitoussi has also expressed alarm, saying: “If there is no real solidarity, a real mutualisation of the debt, we will either continue to go even further underwater or do something politically incorrect but inevitable: say ‘enough’ and get out.”
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