The Eurozone’s Evolving Fiscal Ecosystem: Mitigating Fiscal Discipline by Governing Through Off-Balance-Sheet Fiscal Agencies

Andrei Guter-Sandu, Steffen Murau

Research output: Contribution to journalArticlepeer-review

20 Citations (SciVal)


The original Maastricht regime designed the Eurozone’s fiscal segment in a way that sought to keep member states’ treasury budgets balanced by disciplining them through market forces, reducing the overall volume of public indebtedness, prohibiting monetary financing, and avoiding that Eurozone treasuries bail each other out. In this article, we analyse how these ‘neoliberal’ rules for fiscal governance have been gradually superseded by an alternative approach that we call ‘governing through off-balance-sheet fiscal agencies’ (OBFAs). OBFAs are special purpose vehicles that complement treasuries in supporting public investment, offering solvency insurance for banks, providing capital insurance of last resort for other treasuries, and expanding the stock of safe assets. By sponsoring OBFAs, treasuries can substitute ‘actual’ liabilities on their balance sheets, which are potentially in conflict with the EU’s neoliberal fiscal rules, with ‘contingent’ liabilities–guarantees that do not appear on-balance-sheet. Together, national and supra-national treasuries and OBFAs form a ‘fiscal ecosystem’ in which neoliberal fiscal rules get re-emphasised but in practice are increasingly mitigated. This new mode of Eurozone fiscal governance is reflected not only in multiple policies implemented since 2010–the Recovery and Resilience Facility for example–but also represents the main strategy in many Eurozone reform proposals.

Original languageEnglish
Pages (from-to)62-80
Number of pages19
JournalNew Political Economy
Issue number1
Early online date8 Apr 2021
Publication statusPublished - 31 Dec 2022

Bibliographical note

Funding Information:
Andrei Guter-Sandu acknowledges funding from the Economic and Social Research Council (ESRC) for his postdoctoral fellowship at the Centre for Analysis of Risk and Regulation (CARR) at the London School of Economics and Political Science (LSE) (Grant number: ES/T008687/1). Steffen Murau acknowledges funding via postdoctoral research stipends of the German Research Foundation (Deutsche Forschungsgemeinschaft, DFG) for a fellowship at the Global Development Policy Center of Boston University as well as the German Academic Exchange Service (Deutscher Akademischer Austauschdienst, DAAD) for a fellowship at the Weatherhead Center for International Affairs of Harvard University. We have presented earlier versions of this article at the 26th Annual Conference on Alternative Economic Policy in Europe (EuroMemo) in September 2020 and at the research seminar of the Department of International Politics at City, University of London in October 2020. For comments on this article at various stages, we wish to thank Yannis Eustathopoulos, Trevor Evans, Armin Haas, Marina H?bner, Roland Kulke, Elizaveta Kuznetsova, Perry Mehrling, Andrea Mennicken, Anastasia Nesvetailova, Fabian Pape, Stefano Pagliari, Dominique Plihon, Mathis Richtmann, Jamal Saadaoui, Etienne Schneider, Stefano Sgambati, Jens van ?t Klooster as well as the anonymous reviewers.


  • Critical macro-finance
  • Eurocrisis
  • European Stability Mechanism
  • neoliberalism
  • Recovery and Resilience Facility

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Political Science and International Relations


Dive into the research topics of 'The Eurozone’s Evolving Fiscal Ecosystem: Mitigating Fiscal Discipline by Governing Through Off-Balance-Sheet Fiscal Agencies'. Together they form a unique fingerprint.

Cite this