Sept. 12 - Germany's Constitutional Court rules Germany can ratify the euro zone's rescue fund and budget pact as long it can guarantee there will be no increase in German financial exposure to the bailout fund without parliament's approval. But how far will the European Stability Mechanism go towards solving the euro zone crisis? Joanna Partridge reports.
The green light from the men in red for the euro zone's bailout fund. As expected Germany's Constitutional Court approved the European Stability Mechanism and the euro zone's budget pact. It rejected 37,000 complaints, many from eurosceptics. But it did attach some conditions - insisting Germany's liability would be limited to 190 billion euros - just over a quarter of the 700 billion total. Anything over that will need parliamentary approval. German Chancellor Angela Merkel called it a good day for Germany and Europe. SOUNDBITE: German Chancellor Angela Merkel, saying (German): "The emphasis on the rights of the parliament gives security to all. The parliament but also the taxpayers, the citizens of this country, and this security is important for the course we have taken." European stocks and the euro bounced as investors breathed a sigh of relief that the ESM can take effect after months of delay. Some had been worried about the conditions the court might attach. Carsten Brzeski from ING welcomed the verdict. SOUNDBITE: Carsten Brzeski, Senior Economist, ING, saying (English): "The court has even been less strict than some had expected because even this liability thing, this cap on liability is also a conditional one. So if the Bundesbank in the future, or the Bundestag in the future is in favour of increasing the ESM's firepower, they could do it, so it's not a cap for good on the size of the ESM." But this isn't a solution to the euro zone's problems. Jerome Booth from Ashmore Investment believes the ECB's decision to buy bonds was a more important step. SOUNDBITE: Jerome Booth, Fund Manager, Ashmore Investment, saying (English): "Even that is really passing the problem back to governments. It's up to governments to decide whether they can take the fiscal adjustment and structural reforms needed to get credibility back." It may not be long before the ESM gets its first loan request. Spain is under pressure to ask for a full sovereign bailout, on top of the 100 billion euros already agreed for its troubled banks. And there's another big question still to be answered. How much power euro zone countries will have to give to Brussels before the crisis is finally solved. Joanna Partridge, Reuters