Effect-Based Analysis in the Court's Jurisprudence on the Euro Crisis

Effect-based analysis is genuinely implicit in economic reasoning. The jurisprudence developed throughout the debt crisis reveals frequent recourse to effect-based analysis for the legal assessment of the compatibility of anti-crisis instruments with EU law. The dividing line between the European Court of Justice (ECJ) (in Gauweiler and Pringle) and the German Constitutional Court (in its request for a preliminary ruling on the OMT programme) can be drawn according to whether spillover effects for the purpose of delineating monetary from fiscal policy are recognised or not. This difference inspires the diverging answers the courts give on whether the ECB acted within its mandate. This article examines the scope and nature of the Court’s effects orientation and seeks to analyse the underlying economic rationale guiding the Court’s interpretation of the relevant EU Treaty norms – this analysis led the ECJ to results that conflicted with the analysis of the German Constitutional Court. The different (economic) understandings adopted by the courts are also explored in light of the functionality of interest rates in relation to monetary and fiscal policy.