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


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 In this article, we analyse how these ‘neoliberal’ rules for fiscal governance have been gradually superseded by an alternative approach that we call ‘governing through off-balance-sheet fiscal agencies’ (OBFAs).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
JournalNew Political Economy
Early online date8 Apr 2021
Publication statusE-pub ahead of print - 8 Apr 2021


  • 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

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