Good week for the euro - but also a warning

by Stephanie Flanders

BBC News
September 12, 2012

The German chancellor says it's a "good day for Germany and a good day for Europe". Better than that, it's been a good week.

First, the European Central Bank delivered on its pledge to do more - possibly quite a lot more - to hold the euro together. Now the German constitutional court has ruled in favour the new European bailout fund, the ESM.

Cue sighs of relief in financial markets around the world. But there's an irony in both decisions which should not be lost on the financial markets or Europe's politicians: the institutions that seem to be most keen to put control over the future of the euro into the hands of the voters are the ones that are least accountable to them.

This is quite clear in the case of the German constitutional court's judgement. As expected, there were conditions attached to the court's decision to allow the ESM to go ahead: Germany's potential liability must remain at the current level of 190bn euros (£152bn; $245bn).

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