While this bailout fund approval was widely expected by the German court it was a potential fly in the ointment. Futures are happy with the result as we begin day 1 of the Fed meetingl the euro rallies and the dollar continues a major swoon. Via Reuters:
- Germany's Constitutional Court gave a green light on Wednesday for the country to ratify the euro zone's new rescue fund and budget pact but gave parliament veto powers over any future increases in the size of the fund.
- Rejecting injunction requests from 37,000 plaintiffs seeking to block the treaties, the court said ratification of the European Stability Mechanism(ESM) could go ahead with the "proviso" that German liability be limited to 190 billion euros ($244.77 billion), as agreed in the ESM treaty. Any increase in that amount would require prior approval by the Bundestag lower house of parliament.
- The plaintiffs, including euroskeptics from Chancellor Angela Merkel's ruling center-right coalition and Left Party hard-liners opposed to European integration, had argued that the treaties expose Germany to unlimited financial liability and cede too much sovereignty to centralized European authorities. The court ruled as it has in the past that deeper integration of the European Union did not violate the German "Basic Law" as long as parliament was fully consulted.
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