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(CNN) -- Germany's Constitutional Court has dismissed a complaint against the proposed European rescue fund, the European Stability Mechanism.

The decision, which was months in the making, clears the way for the introduction of the ESM, which is due to become operational in October. The ruling included conditions to limit Germany's liability under the fund.

In Germany's biggest ever constitutional challenge, some 37,000 citizens had tried to block the fund, claiming it violated the country's right to retain control of its own budget.

The citizens, who backed a legal push from "More Democracy" movement, claimed the mechanism could expose the country to unlimited demands for taxpayer money. They wanted a referendum to decide the issue.

The economic future of Europe

Supporters of the rescue fund, including Chancellor Angela Merkel, said it was a vital part of measures to prop up ailing European economies and avert the collapse of the euro.

Ex-Greek PM: Reform takes time

Asian share markets rose ahead of the ruling, as did the euro, amid expectations that the court would reject the challenge. It was feared that a negative ruling would throw global markets into chaos and force Europe's politicians to return to the drawing board to tackle Europe's debt crisis.

Dissecting Draghi's decisions

The European Stability Mechanism fund is set to provide a multi-billion euro pot to aid European countries struggling to cope with their debt burden.

It's an integral part of a plan announced by ECB President Mario Draghi last week to buy bonds with a duration of between one and three years.

The bond purchases, described as "outright monetary transactions," would be available to countries who seek outside help and who agree to meet a number of budgetary conditions before approval. There would be no "ex ante limits on the size" of the purchases, Draghi said, repeating his pledge to do "whatever it takes" to save the euro.

The measure is designed to keep a lid on bond yields and borrowing costs.