Economic & Monetary Union at a Crossroad

Project Start:01/2020
Status:Ongoing
Researchers:Sandra Eckert, Vincent R. Lindner, Christian May, Daniel Mertens, Andreas Nölke, Matthias Thiemann, Claudius Wagemann
Category: Macro Finance
Funded by:SAFE

"A sustainable financial architecture for Europe relies on a stable monetary system. Although the crisis of the Economic and Monetary Union (EMU) today is perceived to be less pressing than before the ECB intervention in 2012 (“whatever it takes”), many observers still see substantial problems or even increasing risks (e.g. stemming from France and Italy). Correspondingly, we are witnessing a continuous stream of reforms and reform proposals for EMU and the European Banking Union (EBU). Strikingly, reforms are watered down, regulations are not enforced and many reform proposals simply remain dead in the water. The list of unsuccessful ideas inter alia includes no bail-out clauses for states, bail-in rules for banks and Maastricht deficit criteria.

The focus of the proposed research group is on the political economy of these reform processes: How can we explain why so many reforms and reform proposals remain futile in political terms? We will study the process from the origin of ideas about EMU and EBU reforms via political deliberations and decisions to the final (non-) enforcement. Bracketing the economic substance of these reforms (i.e. whether they are meaningful or not), the research group will focus on the relationship between the initiators of reform ideas (to put it simple: the technocratic sphere, on the national and European levels), national governments/oppositions and the electorate.

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