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The governance of EMU was premised on the idea that market discipline, informed by fiscal surveillance, supports the building of a hard currency union. Theory would lead us to expect that the international–commercial and the supranational–technocratic assessments of sovereign debt are fairly aligned. But they were not. We show that credit rating agencies and Eurostat have rather different assessments of what certain policies mean for sovereign debt. These assessments reveal divergent institutional logics of market actors and regulators. Private agencies are prone to conformism and herding behavior, allowing for little consistent discipline, while the public agency follows a bureaucratic imperative of accountability and transparency, which gets in the way of evolving policy priorities. Our findings thus shed light on the difficulties of fiscal governance by regulation only but they also suggest that reforms at the EMU level do not provide quick fixes. [ABSTRACT FROM AUTHOR]

For many political economists, the loss of monetary sovereignty is the major reason why the Southern periphery fared so badly in the Euro area crisis. Monetary sovereignty here means the ability of the central bank to devalue the exchange rate or to buy government debt by printing the domestic currency. We explore this diagnosis by comparing three countries – Hungary, Latvia and Greece – that received considerable amounts of external assistance under different monetary regimes. The evidence does not suggest that monetary sovereignty helped Hungary and Latvia to stabilize their economies. Rather, cooperation and external assistance made foreign banks share in the costs of stabilization. By contrast, the provision of liquidity by the European Central Bank inadvertently facilitated the reduction of foreign banks’ exposure to Greece which left the Greek sovereign even more exposed. By viewing the Euro area as a monetary system rather than an incomplete state, we see that what is needed for Euro area stabilization is cooperation over banking union, rather than a fully-fledged federal budget. [ABSTRACT FROM PUBLISHER]

The article looks at macroeconomic policy-making in the U.S. and the European Union (EU), using the 2008 global financial meltdown as an "experiment" in how governing institutions in the two settings address a crisis. The author notes that in both the U.S. and EU, the governing ideology for several decades has called for macroeconomic policy decisions, particularly in the area of monetary policy, to be independent of political or equity considerations. He outlines how this view was institutionalized in the U.S. and the EU. Reviewing the aftermath of the 2008 crisis, he states that the central banks and other government institutions acted differently in the two settings but that the result in terms of economic stabilization was approximately the same.

This paper analyses how the EU regulatory state expands into fiscal surveillance and what conflicts arise in the process. That the EU should have gone down the route of regulating budgets is puzzling. In Majone's original concept, the regulatory state is meant not to interfere with member states' budgetary redistributive policies. Yet the revision of the Pact strengthened the regulatory content of fiscal surveillance by reformulating the policy problem, strengthening delegated monitoring by the Commission, with Eurostat rather than DG Ecfin at its helm, and by extending control through specialised information. The analysis implies that the revision of the Pact in March 2005 cannot simply be dismissed as a watering down of its fiscal rules. However, there are limitations to regulatory expansion. One limitation is the inherent tension between the requirements of control and the economic justification of fiscal rules, another that economic justifications remain ambiguous and contentious. [ABSTRACT FROM AUTHOR]