The German Federal Constitutional Court announced Monday that it will rule on the Eurozone rescue fund on September 12. The court announced that it will not decide on the injunction which will determine the fate of the $610 (£ 500) billion European Stability Mechanism (ESM) for another two months.
Although the ESM has received support from the German MPs, it awaits ratification in several other countries, including Germany. The court's decision only prolongs anxiety persisting in markets. According to the court, there are certain constitutional issues that must be analyzed before it makes its decision on whether to temporarily block the Eurozone rescue fund as well as the European fiscal pact.
The petition against the injunction was spearheaded by et al the left party (Die Linke), and the German association of family businesses.
Matt Robinson, Moody's director of sovereign research, told the Wall Street Journal, "Continuing delays add to the uncertainty and volatility in European financial markets and undermine the credibility of euro area policymakers' commitment and capacity to implement measures to resolve the sovereign and bank crisis."
According to the report, if the German court decides to impose an injunction against the ESM, the Eurozone Firewall would revert to the EUR440bn European Financial Stability Facility, which would be particularly problematic since more than half of it is already utilized.
Although the ESM is yet to be ratified in other European countries, since Germany is the biggest shareholders it cannot pass without Germany's approval. In order for the ESM to being operating it requires ratification from at least 90 percent of the countries.
