The Maastricht legacy

The new layer of the European economic constitution, introduced by the Maastricht Treaty and reinforced through the Stability and Growth Pact, was underpinned by certain fundamental principles. For Member States joining EMU, monetary policy was defined as an exclusive Union competence and assigned to the ECB. The ECB was seen as an expert body which was supposed to focus on pursuing the specific monetary-policy objective of price stability. Its position as an expert body was buttressed by an enhanced independence from external influence, whether from other Union institutions or from Member States. In contrast, in fiscal and economic policy Member States retained their sovereignty, while the Union was to possess merely coordinating functions. Yet, fiscal sovereignty was not absolute but circumscribed by constitutionally defined reference values on budget deficit and public debt. Restrictions on fiscal sovereignty reflected the primacy of the monetary-policy objective of price stability; they were expected to impose on Member States the budgetary discipline which a monetary policy focusing on price stability was seen to require. In addition, they addressed the probability that in a monetary union negative repercussions of reckless fiscal policy in one Member State would spill over to all the others. Hence, specific preventive safeguards were adopted to ensure prudent fiscal policy. Member States’ fiscal sovereignty found its reverse in their fiscal liability, expressed by the no-bailout clause in Art. 125(1) TFEU. The EU in general and EMU in particular was supposed to be no ‘transfer union’, but only to allow for strictly limited financial transfers from the European level to Member States or from one Member State to another.