New budgetary instruments for the Eurozone and the deeper mutations of the institutional structures of the EMU

Discussions about the necessity to endow the Eurozone with an autonomous fiscal capacity are almost as old as the EMU itself. In 2018, the European Commission made a set of legislative proposals, which have since formed the basis for the discussions between the EU and the Member States. This paper first takes stock of these negotiations, and anticipates the tools and instruments they might ultimately give birth to. It also takes these negotiations as a starting point to analyze some of the deeper institutional transformations that the EMU has undergone in the aftermath of the Eurozone crisis and assesses the use of competence bases to further integration in the field of economic policy. Secondly, it will analyze the evolution of institutional dynamics between EU institutions and the Member States, and highlight new types of interactions. Finally, it will use the envisaged new budgetary instruments as paradigmatic examples of the rise of the principle of conditionality in the EMU.

Reforming the European Stability Mechanism: Principle, Policy, and Pragmatism

This article looks at the EU’s permanent crisis fund, the European Stability Mechanism (ESM). The ESM was set up at the height of the Euro crisis by means of an international treaty concluded between the Eurozone Member States. Two competing models have emerged for its future evolution. According to what may be termed as the supranational model, the ESM would be brought into the fabric of EU law and transformed into a ‘European Monetary Fund’. The European Commission has proposed a Regulation to this effect. According to the intergovernmental model, which has thus far prevailed, the ESM would remain outside the scope of EU law and be reformed by means of revising the ESM Treaty. This paper looks at the relative strengths and weaknesses of these two models, as well as the changes that would be introduced by the draft revised ESM Treaty. It argues that these reforms would plug important gaps in the ESM (and in the Eurozone) framework, but that key challenges remain.

Financial independence and price stability in the ESCB

The idea that central banks should always be sufficiently capitalised is the fundamental aspect of the financial independence doctrine. This doctrine emanates from the principle of central bank independence which prohibits central banks from seeking or taking instructions from Union institutions or governments when fulfilling their ESCB tasks. The doctrine thus imposes constraints to the relation of central banks with their capitalising institutions to prevent situations in which the mandate of the ESCB could be impaired due to pressures from the latter. Financial independence operates then as a safeguard to the ESCB mandate. Yet, this ancillary nature of financial independence vis-à-vis price stability does not prevent the existence of tensions since monetary policy operations involve a degree of financial risk. This paper revisits the way in which this tension has been explained and refines it in view of the specific features of the institutional/financial framework of the ESCB.

The governance and liability of and in distributed ledger technologies: a EU monetary and banking law perspective.

Distributed ledger technologies (DLTs) are decentralized and distributed digital infrastructures for the storing and transfer of information. Decentralized means that its development can only be done through an agreement reached by its participants and stakeholders, whereby no single actor has the capacity to, on its own, manage or alter the network. Decentralization brings security and transparency gains, but it is also inefficient and can create several governance risks, concerning the protection of users’ rights within the network and the liability of the network participants for actions affecting third parties. This can be important in relation to monetary policy issues. With the rise of the crypto-asset market, with decentralized finance and the surge of different DLT-based applications for the provision of banking services, governance and liability become key issues. This article frames and critically assesses these situations in light of EU monetary and banking law regulation.