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Top German court holds hearing on euro rescue fund

Associated Press Modified: July 2, 2012 at 8:30 am •  Published: July 2, 2012

BERLIN (AP) — Germany's highest court said Monday it will hold a hearing next week on calls to block the eurozone's permanent rescue fund and Europe's new treaty enshrining fiscal discipline.

Germany's Parliament voted by a big majority last Friday to approve both the €500 billion ($633 billion) rescue fund, the European Stability Mechanism, and the budget pact — the so-called fiscal compact, a cherished project of Chancellor Angela Merkel.

Opponents swiftly applied to the Federal Constitutional Court for injunctions blocking the plans while judges consider whether they're in line with German law.

Germany's President Joachim Gauck has agreed not to sign the legislation before the constitutional court rules on the calls. The ESM can't take effect without Germany's approval.

The fund was initially meant to be operational as of July, and European policy makers still hope that it can replace its temporary predecessor, the European Financial Stability Facility, by the end of the month. According to plans agreed at an EU summit last week, for instance, the ESM is meant to handle the €100 billion Spain has been offered to recapitalize its ailing banks.

The hearing will be held next Tuesday in the western German city of Karlsruhe.

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