German Constitutional Court Approves ESM
September 12, 2012 @ 10:30 AM EST
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German Constitutional Court Allows Ratification of ESM
In a much-anticipated statement today, Germany's Constitutional Court announced that it would allow the ratification of ESM (the Eurozone's permanent bailout mechanism).
More accurately, the court dismissed motions brought by those opposing the ESM to halt the ratification of the ESM.
It should be noted that the decision was only a temporary ruling on the applications for an immediate injunction. A final decision is expected come later. However, today’s decision paves the way for the ratification of the ESM in Germany.
Recall that the ratification is a crucial step in getting the fund operational due to Germany's outsized contribution.
In addition, today's ruling did come with some conditions, though they were not as onerous as some had feared. The Court said the €190B ceiling on Germany's financial guarantees that was established when the Bundestag approved the ESM could only be increased with the approval of lawmakers. It also said that both houses of the German Parliament have the right to be kept apprised of the ESM's activities.
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