6 - Judicial Control of Monetary and Fiscal Decisions in the European Union

Summary

INTRODUCTION

Ongoing debt crisis (since 2010) of several Member States of the Eurozone resulting from global economic slowdown (since 2007) sparked doubts about viability of single currency introduced more than 15 years ago (1999). The collapse of the Eurozone and reintroduction of national currencies has been feared since then.

The European Union and the Member States reacted with rescue measures. Heavily indebted Member States – Greece, Portugal, Ireland and Cyprus – needed massive rescue loans. The loans were provided by other Member States, international institutions and funds newly established within the European Union for this purpose. The European Central Bank alleviated with purchase of bonds of these states plus Italy and Spain on financial market, lending money to endangered banks, extremely low interest rates and quantitative easing.

Both rescue loans and unconventional monetary policy cause political skirmishes between the Member States. Mandated austerity is objected by people in the South and unexpected expenditures for rescue in the North where also inflation is feared. National politicians cannot ignore these views and push for the solutions they perceive as serving national interests. Relations between the Member States thus deteriorate. The entire existence of the European Union is questioned.

The crisis emerged due to the chronic incompliance with the rules agreed for the maintenance of the single currency two decades ago. Several measures adopted due to the crisis also compromise existing rules.

The European Communities were, and the European Union is, a polity governed with law (rule of law), albeit with specific supranational features.1 Judiciary plays crucial role. The above mentioned controversies are thus increasingly brought to courts of the European Union and also to the courts of the Member States, because adjudication of this supranational law is shared by supranational and national judiciary. A collection of papers addressing recent trends in judiciary in the European Union thus deserves attention to it.

Nevertheless, judicial control of fiscal and monetary decisions is rare or entirely missing in the world. Its potential, methods and limits are thus rarely discussed. Therefore, this paper must start with an overview of roles and functioning of judiciary plus an outline of nature of money and public budgets.