In this year of the euro’s 25th anniversary, the book revisits the architecture of the European currency union as it continues to evolve and faces today’s concurrent challenges posed by its members’ high and diverging government debt levels, debt sustainability concerns, and the considerable public expenditures, investments and reforms needed in particular to address climate change and the green transition.
Key components reviewed include the single monetary policy for the eurozone; the common rules and processes for keeping a measure of discipline and orderliness in the members’ economic and budgetary policies; the containment of financial fragmentation within the eurozone; and stability support for members under financial stress.
The book focuses on the central role of the European Central Bank (ECB) and considers such issues as:
how the ECB has defined its monetary policy mandate and calibrated its actions within the matrix of broadly worded objectives and constraints set by the EU Treaties;
the possible tensions and trade-offs between the ECB’s primary mission of inflation control and the episodic need to avert risks to financial stability, contain financial fragmentation and preserve the cohesion of the European currency union;
the difficulties of a single monetary policy interacting with the relative heterogeneity of economic characteristics and national fiscal policies across the eurozone;
the ECB’s possible role in supporting the transition to a lower-carbon economy; and
how judicial review by the European Court of Justice has to contend with the complexities and inherent uncertainties of monetary analysis and the ECB’s need of a broad margin of policy judgment.
As part of the EU’s incomplete economic and monetary union, the currency union remains a work in progress. The challenges and choices at hand present serious legal questions that cannot be viewed in isolation from the economic and political issues—a kind of 3D combination puzzle to be solved.