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The Euro's fate in the hands of Germany's Constitutional Court ?

September 11th, 2012 - On Wednesday Germany's Constitutional Court is expected to rule on whether the European Stability Mechanism (the $639 billion bailout fund) violates German Constitutional Law. Peter Gauweiler, a backbench politician from Chancellor Merkel's conservative majority, has launched this lawsuit with the support of 37.000 German citizens. In essence, Gauweiler argues that, in particular after the latest bond-buying plans of the EU, national parliament would be deprived of its constitutionally sanctioned control over the budget.

If successful, the German Supreme Court could derail the indispensable rescue plan for the fragile Euro. Given that the German ratification of the European Stability Mechanism is essential (Germany contributes roughly 30% to the bailout fund) Berlin, Brussels and the rest of Europe are in a state of tense anticipation of the Court's decision. Chancellor Merkel and her ministers appear to be convinced that Gauweiler will fail with his emergency petition. Yet Germany's Constitutional Court is known for its independent and at times surprising rulings. And the public mood in Germany has turned against the bailout plan for the Euro in recent months. If Germany's commitment to the European Stability Mechanism were ruled unconstitutional, the rescue of the Euro would be in deep (fatal?) trouble.

Dr. Oliver Schmidtke is an expert on German Politics and European Integration. He will be available for comments on September 12th and 13th. To contact him for an interview please send him an email at This email address is being protected from spambots. You need JavaScript enabled to view it.

Dr. Oliver Schmidtke is director of the Center for Global Studies at the University of Victoria where he also holds the Jean Monnet Chair in European History and Politics. He is specialized in comparative European politics and European integration. Dr. Oliver Schmidtke is part of a cross-Canada network of experts working on European policy issues, the Strategic Knowledge Cluster Canada-Europe Transatlantic Dialogue .

European Commission: First steps towards a single banking supervision?

On September 12th, the European Commission will present a proposal to design an ambitious single banking supervision mechanism in the euro area. A single supervision would be an important next step in the EU's response to the financial crisis. It would entail a big change in the way in which banks in the EU area are supervised, which currently is based on the principle of home country control.

The situation is akin to that of the blind men and the elephant metaphor: the blind men (the national banking supervisors) cannot "see" the elephant (large transnational eurozone banks) by touching its parts. This is why a supranational supervisor, most likely the European Central Bank (ECB), becomes necessary in order to have a complete picture of the banks and their relationship to the eurozone's financial system. It would also remove national biases with national supervisors. While an important and contentious step, a single eurozone banking supervisor would fall well short of establishing a "banking union", which itself aims to sever the link between the public finances of EU member states and the health of their banking sectors. For that to happen, a single euro-wide deposit insurance scheme and bank resolution mechanism would also be necessary.

Dr. Patrick LeBlond and Dr. Paul Schure are available for interviews. For more information please contact them via email. Both scholars are part of a cross-Canada network of experts working on European policy issues, the Strategic Knowledge Cluster Canada-Europe Transatlantic Dialogue.

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