One of the bitterest fights in monetary policy lands in court this week as Germany's highest legal authority hears evidence over whether the European Central Bank's pledge to save the euro last year undermined the constitution.
The hearing comes as crisis-weary Germans prepare to vote in a September general election that for the first time includes a euro skeptic party. But also of note are the star witnesses, two longstanding friends who have risen through the ranks to become arguably Germany's most powerful unelected officials. Both have been instrumental in framing the response to the euro zone crisis but are now fighting from opposing corners.
The court's judgment will not come until later in the year and it is far from clear how it could influence the independent central bank, but inside the ECB the prospect of losing out in Germany's court of public opinion is not taken lightly. As the euro zone's biggest economy, Germany, via the Bundesbank, is the ECB's biggest shareholder.
From the outset Jens Weidmann, the Bundesbank president who sits on the ECB's governing council, opposed the ECB's Outright Monetary Transactions policy – under which the ECB would buy the bonds of countries subject to speculation that they might leave the euro zone. But, outside Germany, he failed to win the argument that such bond buying would be tantamount to funding governments by printing money, risking hyperinflation.
His testimony to the constitutional court in Karlsruhe will be challenged by Jörg Asmussen, a member of the smaller inner sanctum at the top of the ECB – the executive board, whose task will be to make the case to the court, and a skeptical German public, that such bond buying is within the bank's remit.
Both are good communicators, with Mr. Weidmann's iron reasoning set to clash with the political negotiating skills that puts Mr. Asmussen in the room for most big decisions made in Brussels when dealing with bailouts.
Mario Draghi, the ECB president whose pledge last July to do "whatever it takes" to save the euro and who then spearheaded the creation of OMT last September, went out of his way at his monthly press conference last week to frame the courtroom argument for a German audience.
"Frankly when you look at the data, it's really very hard not to state that OMT has been probably the most successful monetary policy measure undertaken in recent times," Mr. Draghi said. "Ten-year sovereign bond yields declined spectacularly in several countries but went up in Germany. And that's very important for the saver, for the German saver, for insurance companies and pension funds."
The ironies around the case are layered almost as thickly as the accumulation of legal precedents and cross references contained in a typical constitutional court ruling.