The European Commission sent official notice to Berlin on Wednesday that it would begin a legal procedure after determining Germany's Constitutional Court overstepped in a ruling over the European Central Bank's (ECB) bond purchasing program.
The ruling by the German court suggested the European Court of Justice's (ECJ) stance on an ECB stimulus program was not in line with Germany's constitution.
The case is the first such instance of the German Constitutional Court going against a finding by the European Court of Justice.
The EU claims the German high court ruling could pose a threat to the jurisdiction of the European Court of Justice over the 27-nation bloc.
What is the issue with the German court's ruling?
In May 2020, the German Constitutional Court ruled that an ECB stimulus program, namely a multi-billion Euro bond purchasing program, was in part contrary to the German constitution.
The German court ruling echoed the political sentiment in Berlin where opposition to debt sharing is widespread.
The ECJ warned at the time that the German court's ruling risked jeopardizing the European court's legal standing not just within Germany but other member states within the bloc.
As a result, the Commission has stepped in to address the German Constitutional Court ruling challenging the ECJ decision.
What will the European Commission do?
The European Commission formally notified Berlin in a letter Wednesday that it was launching legal proceedings over the matter. Unlike the German court, the ECJ had ruled the bond-buying program was in line with EU law.
In its notice to Berlin, the Commission wrote, "The judgment of the German Constitutional Court constitutes a serious precedent, both for the future practice of the German Constitutional court itself, and for the supreme and constitutional courts and tribunals of other member states".
With the formal notification, Germany has two months to respond. An "infringement letter" is the first step in a process that can