From 'Homework' to 'Politics' - Some Reflections in Favour of a Eurozone Fiscal Capacity

This paper is one of the results of the fifth cycle of FEPS YAN. The Maastricht Treaty has represented a major shift in the paradigm of the European integration, with the foundation of the European Union and the establishment of a new framework for a common currency. Within such framework, Member States maintained their competences as regards fiscal policy, but they were subject to the limits contained in Article 109j(1) (now Article 140(1) TFEU) and, subsequently, in the Stability and Growth Pact. Although the provisions concerning the Economic and Monetary Union have not been substantially amended since the Maastricht Treaty, the functioning of the common currency underwent a significant revision during the years of the crisis. However, the commitment to a rules-based fiscal policy was never really put into discussion, with a number of shortcomings that can be observed on the basis of an economic analysis. For this reason, a number of solutions have been suggested in order to favour a shift from the current model of rules-based economic policy towards a form of shared fiscal policy, and, in particular, a special attention has been dedicated to the possible shift towards a fiscal capacity of the Eurozone. In the light of the economic analysis identifying the shortcomings of a rules-based economic governance, the paper will aim at framing the issue of the possible institutional arrangements that should be taken into consideration in order to establish a fiscal capacity for the Eurozone, and to ensure its democratic governance.