On 5 May 2020 the German Constitutional Court (GCC) ruled that the decision taken by the European Court of Justice (ECJ) on whether the ECB’s Public Sector Purchase Program (PSPP) was consistent with the Treaty was “incomprehensible” and as a consequence not valid. The GCC gave three months to the ECB to provide the evidence showing that its asset purchase program did not violate the principle of proportionality.

The ruling has been examined by several commentators and academics mainly from the legal viewpoint, in particular with respect to the relationship between the national and European Courts. Less attention has been devoted to the economic and institutional analysis underlying the decision. This is the purpose of this note. A thorough consideration of the main reasoning behind the GCC decision leads to conclude that the judgment of the German court is not only incomprehensible, but also fundamentally flawed.

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