Opinion of the Advocate General — ECLI:EU:C:2018:815
Date: 2018-10-04
Language of the case: German
Subject matter: European Central Bank (ECB);Economic and monetary policy;Euro
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - inadmissible
Origin: Germany

Summary — Judgment of the Court (Grand Chamber), 11 December 2018 1. Questions referred for a preliminary ruling — Jurisdiction of the Court — Limits — Matter referred by a national court that does not accept that the decisions of the Court are binding — Question concerning the interpretation of EU law or the validity of an EU measure — Admissibility (Art. 267 TFEU) 2. Questions referred for a preliminary ruling — Assessment of validity — Question concerning the validity of an EU measure of general application that has not been implemented by measures of national law –– National court hearing a genuine dispute in which the question of validity is raised indirectly — Admissibility (Art. 267 TFEU) 3. Questions referred for a preliminary ruling — Assessment of validity — Question concerning the validity of a measure of the European System of Central Banks –– Measure implementing a secondary markets public sector asset purchase programme — Admissibility (Art. 5(2) TEU; Art. 267 TFEU; Decision 2015/774 of the European Central Bank) 4. Economic and monetary policy — Monetary policy — Scope –– European System of Central Banks (ESCB) secondary markets public sector asset purchase programme — Included (Arts 127(1) TFEU and 282(2) TFEU; Protocol No 4 annexed to the EU and FEU Treaties, Art. 18.1; Decision 2015/774 of the European Central Bank, Recital 4) 5. Economic and monetary policy — Monetary policy — Scope — Open market operations programme implemented by the European System of Central Banks — Included –– Measure entailing effects with regard to economic policy that were foreseeable and knowingly accepted — Irrelevant (Arts 119 TFEU, 127(1) TFEU, 130 TFEU and 282(3) TFEU) 6. Economic and monetary policy — Monetary policy — Implementation — European System of Central Banks (ESCB) secondary markets public sector asset purchase programme — Infringement of the principle of proportionality — None (Art. 5(4) TEU; Arts 119(2) TFEU and 127(1) TFEU; Decision 2015/774 of the European Central Bank, Recitals 4 and 7 and Art. 5) 7. Economic and monetary policy — Monetary policy — Prohibition of monetary financing — Scope — European System of Central Banks (ESCB) secondary markets public sector asset purchase programme — Not covered — Conditions (Art. 123(1) TFEU; Decision 2015/774 of the European Central Bank) 8. Economic and monetary policy — Monetary policy — Prohibition of monetary financing — Infringement — Conditions –– European System of Central Banks (ESCB) secondary markets public sector asset purchase programme –– Existence of guarantees capable of ensuring that private operators have no certainty that the bonds that they may acquire from the Member States will subsequently be purchased by the ESCB on the secondary markets — No infringement (Art. 123(1) TFEU; Decision 2015/774 of the European Central Bank) 9. Economic and monetary policy — Monetary policy — Prohibition of monetary financing — Infringement — Conditions –– European System of Central Banks (ESCB) secondary markets public sector asset purchase programme — Impetus of the Member States to pursue a sound budgetary policy not reduced — No infringement (Art. 123(1) TFEU; Decision 2015/774 of the European Central Bank) 10. Economic and monetary policy — Monetary policy — Prohibition of monetary financing — Infringement — Conditions –– European System of Central Banks (ESCB) secondary markets public sector asset purchase programme –– ESCB holding government bonds until maturity — No infringement (Art. 123(1) TFEU; Decision 2015/774 of the European Central Bank) 11. Economic and monetary policy — Monetary policy — Prohibition of monetary financing — Infringement — Conditions –– European System of Central Banks (ESCB) secondary markets public sector asset purchase programme –– Purchase of government bonds at a negative yield to maturity — No infringement (Art. 123(1) TFEU; Protocol No 4 annexed to the EU and FEU Treaties, Art. 18.1; Decision 2015/774 of the European Central Bank) 1. See the text of the decision. (see paras 18, 19) 2. See the text of the decision. (see paras 20, 21) 3. See the text of the decision. (see paras 23-25) 4. The Court has held that in order to determine whether a measure falls within the area of monetary policy it is appropriate to refer principally to the objectives of that measure. The instruments which the measure employs in order to attain those objectives are also relevant (judgments of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraphs 53 and 55, and of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraph 46). In the first place, so far as the objectives of Decision 2015/774 are concerned, it is apparent from recital 4 of that decision that the purpose of the latter is to contribute to a return of inflation rates to levels below, but close to, 2% over the medium term. In that regard, it is important to point out that the authors of the Treaties chose to define the primary objective of the Union’s monetary policy –– namely the maintenance of price stability –– in a general and abstract manner, but did not spell out precisely how that objective was to be given concrete expression in quantitative terms. It does not appear that the specification of the objective of maintaining price stability as the maintenance of inflation rates at levels below, but close to, 2% over the medium term, which the ESCB chose to adopt in 2003, is vitiated by a manifest error of assessment and goes beyond the framework established by the FEU Treaty. As the ECB has explained, such a choice can properly be based, inter alia, on the fact that instruments for measuring inflation are not precise, on the appreciable differences in inflation within the euro area and on the need to preserve a safety margin to guard against the possible emergence of a risk of deflation. It follows that, as the ECB submits and as the referring court has indeed noted, the specific objective set out in recital 4 of Decision 2015/774 can be attached to the primary objective of the Union’s monetary policy, as set out in Article 127(1) and Article 282(2) TFEU. That conclusion is not called into question by the fact, to which the referring court draws attention, that the PSPP allegedly has considerable effects on the balance sheets of commercial banks as well as on the refinancing terms of the Member States of the euro area. In the second place, as regards the means used in Decision 2015/774 to achieve the objective of maintaining price stability, it is common ground that the PSPP is based on the purchase of government bonds on secondary markets. It is clear from Article 18.1 of the Protocol on the ESCB and the ECB, which forms part of Chapter IV of that protocol, that in order to achieve the objectives of the ESCB and to carry out its tasks, as provided for in primary law, the ECB and the central banks of the Member States may, in principle, operate in the financial markets by buying and selling outright marketable instruments denominated in euros. It follows that the operations provided for by Decision 2015/774 use one of the monetary policy instruments for which primary law provides (see, by analogy, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraph 54). In view of the foregoing, it follows that, taking account of its objective and of the means provided for achieving that objective, a decision such as Decision 2015/774 falls within the sphere of monetary policy. (see paras 53-58, 68-70) 5. It must be emphasised in that regard that Article 127(1) TFEU provides, inter alia, that (i) without prejudice to its primary objective of maintaining price stability, the ESCB is to support the general economic policies in the Union and that (ii) the ESCB must act in accordance with the principles laid down in Article 119 TFEU. Accordingly, within the institutional balance established by the provisions of Title VIII of the FEU Treaty, which includes the independence of the ESCB guaranteed by Article 130 and Article 282(3) TFEU, the authors of the Treaties did not intend to make an absolute separation between economic and monetary policies In that connection, it should be recalled that a monetary policy measure cannot be treated as equivalent to an economic policy measure for the sole reason that it may have indirect effects that can also be sought in the context of economic policy (see, to that effect, judgments of 27 November 2012, Pringle, C‑370/12, EU:C:2012:756, paragraph 56, and of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraph 52). The Court cannot concur with the referring court’s view that any effects of an open market operations programme that were knowingly accepted and definitely foreseeable by the ESCB when the programme was set up should not be regarded as ‘indirect effects’ of the programme. More specifically, as the ECB explained before the Court, the transmission of the ESCB’s monetary policy measures to price trends takes place via, inter alia, facilitation of the supply of credit to the economy and modification of the behaviour of businesses and individuals with regard to investment, consumption and saving. Consequently, in order to exert an influence on inflation rates, the ESCB necessarily has to adopt measures that have certain effects on the real economy, which might also be sought –– to different ends –– in the context of economic policy. In particular, when the maintenance of price stability requires the ESCB to seek to raise inflation, the measures that it must adopt to ease monetary and financial conditions in the euro area for that purpose may entail an impact on the interest rates of government bonds because, inter alia, those interest rates play a decisive role in the setting of the interest rates applicable to the various economic actors (see, to that effect, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraphs 78 and 108). That being so, if the ESCB were precluded altogether from adopting such measures when their effects are foreseeable and knowingly accepted, that would, in practice, prevent it from using the means made available to it by the Treaties for the purpose of achieving monetary policy objectives and might –– in particular in the context of an economic crisis entailing a risk of deflation –– represent an insurmountable obstacle to its accomplishing the task assigned to it by primary law. (see paras 60-62, 65-67) 6. See the text of the decision. (see paras 72-76, 78, 80, 85-92, 98, 100) 7. As regards Decision 2015/774, it should be observed that under the PSPP the ESCB is not entitled to purchase bonds directly from public authorities and bodies of the Member States, but only to do so indirectly, on the secondary markets. The intervention by the ESCB provided for by that programme thus cannot be equated with a measure granting financial assistance to a Member State. However, the Court has held that Article 123(1) TFEU imposes two further limits on the ESCB when it adopts a programme for purchasing bonds issued by the public authorities and bodies of the Union and the Member States. First, the ESCB cannot validly purchase bonds on the secondary markets under conditions which would, in practice, mean that its intervention has an effect equivalent to that of a direct purchase of bonds from the public authorities and bodies of the Member States (see, to that effect, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraph 97). Secondly, the ESCB must build sufficient safeguards into its intervention to ensure that the latter does not fall foul of the prohibition of monetary financing in Article 123 TFEU, by satisfying itself that the programme is not such as to reduce the impetus which that provision is intended to give the Member States to follow a sound budgetary policy (see, to that effect, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraphs 100 to 102 and 109). The safeguards which the ESCB must provide so that those two restrictions are observed will depend both on the particular features of the programme under consideration and on the economic context in which that programme is adopted and implemented. Whether those safeguards are sufficient must then be determined by the Court in the event of the programme being challenged. (see paras 104-108) 8. See the text of the decision. (see paras 110, 111, 113, 117, 127) 9. It should be borne in mind that the fact that implementation of an open market operations programme to some extent facilitates financing for the Member States concerned is not decisive, since the conduct of monetary policy will always entail an impact on interest rates and bank refinancing conditions, which necessarily has consequences for the financing conditions of the public deficit of the Member States (see, to that effect, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraphs 108 and 110). Accordingly, although such a programme may make it foreseeable that, in the months ahead, a not inconsiderable proportion of the bonds issued by a Member State is likely to be purchased by the ESCB, which can facilitate that Member State’s financing, that does not in itself mean that the programme is incompatible with Article 123(1) TFEU. However, in order to avoid a situation in which the Member States’ impetus to pursue a sound budgetary policy is reduced, the adoption and implementation of such a programme may not create certainty regarding a future purchase of Member State bonds, in consequence of which Member States might adopt a budgetary policy that fails to take account of the fact that they will be compelled, in the event of a deficit, to seek financing on the markets, or in consequence of which they would be protected against the consequences which a change in their macroeconomic or budgetary situation may have in that regard (see, to that effect, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraphs 113 and 114). In that context, it must be stated, in the first place, that, according to recital 7 of Decision 2015/774, the PSPP is intended to be implemented only until the Governing Council sees a sustained adjustment in the path of inflation which is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term. Although the actual period of anticipated application of the PSPP has nonetheless been extended on a number of occasions, that principle has never been called into question when it was decided to adopt those extensions, as is confirmed by recital 3 of Decision 2015/2464 and recital 5 of Decision 2017/100. It follows that the ESCB has, in its successive decisions, provided for the purchase of government bonds only in so far as necessary for the maintenance of price stability, that it has regularly revised the PSPP volume and that it has consistently preserved the temporary nature of that programme. Accordingly, Decision 2015/774 does not enable the Member States to determine their budgetary policy without taking account of the fact that, in the medium term, continuity in the implementation of the PSPP is in no way guaranteed and that they will thus be compelled, in the event of a deficit, to seek financing on the markets without being able to take advantage of the easing of financing conditions that implementation of the PSPP may entail (see, by analogy, judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraphs 112 and 114). In the second place, it is important to note that Decision 2015/774 and the Guideline contain a series of safeguards designed to limit the effects of the PSPP on the impetus to pursue a sound budgetary policy. (see paras 130-134, 136, 137) 10. See the text of the decision. (see paras 146-149) 11. See the text of the decision. (see paras 53-157)