Proportionality: A constitutional principle for demarcating “monetary” and “economic” policy?

Abstract It is a clash between the Court of Justice of the European Union (CJEU) and the German Federal Constitutional Court (GFCC) that has made the question posed in the title of this contribution a hot topic among EU lawyers. The CJEU answered it in the negative and 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 … .” It applied the proportionality principle as a yardstick to the correct use of the competence but not to its demarcation. The GFCC, by contrast, did not accept this and instead insisted that “the principle of proportionality … also applies to the division of competences.” It characterized the CJEU’s reasoning as “simply not comprehensible,” “simply untenable,” and “simply not comprehensible and thus objectively arbitrary.” Consequently, the GFCC declared both the contested ECB measure and the CJEU’s judgment upholding it ultra vires acts, stripping them (conditionally) of their “binding force in Germany.” This contribution weighs the competing arguments and concludes that the stronger ones are on the side of the CJEU. It explains how, in the meantime, the concrete dispute has been settled, while the underlying dissent lingers, ready to resurface at any moment.