Monetary v. Economic Policy: A Bug in the Maastricht Design?

Policy Study


Read the Study

With an order issued on 14 January 2014, the German Federal Constitutional Court (FCC), for the first time in its history, referred a question to the Court of Justice of the European Union (CJEU) for a preliminary ruling under Article 267(1) of the Treaty on the Functioning of the European Union (TFEU). The controversy concerns the Outright Monetary Transaction (OMT) programme, consisting in the potentially unlimited purchase of sovereign bonds by the European Central Bank (ECB) on the secondary market.

The OMT case is situated at the crossroad of a bundle of legal, economic and political issues. In particular, it directly concerns the asymmetric construction of the Economic and Monetary Union, as designed in the Maastricht Treaty, and now based on the rules contained in Title VIII of Part III of the TFEU. In particular, the Economic and Monetary Union is built on the separation between a “single monetary policy”, governed by the ECB, and the “close coordination of Member States’ economic policies”, whose definition remains the competence of the national governments. The definition of the boundaries between “economic” and “monetary” policies is, indeed, at the heart of the dispute between the FCC and the ECB.

The paper will argue that such controversial separation between “economic” and “monetary” policies reflects a wrong political choice made at the time of the Maastricht Treaty, based on a neoliberal approach that has proven to be inadequate to face the challenges brought by the financial crisis. To this end, the paper will investigate the (strictly interconnected) legal and economic issues deriving from the separation, operated by the Treaty, between “economic” and “monetary” policies. In particular, the legal and the economic arguments will be jointly analysed in order to demonstrate how the attempt to “constitutionalise” a flawed economic theory has resulted into a number of legal contradictions, some of which have reached the surface in the OMT case. The paper aims, therefore, at investigating the legal and economic issues deriving from the separation, operated by the Treaty, between “economic” and “monetary” policies, and to present a set of proposals to correct and overcome the Maastricht design. 

Find all related publications

A positive narrative for a Just Transition

An approach to a more people-centred communication

Redefining European engagement in the Israeli-Palestinian conflict

From financial aid to institution building

Growing remittance industry

Progressive Migration Group series

External influences in the Western Balkans: Where are we at?

Balkan Focus Series
Find all related Progressive Post
Progressive Post

Navigating the greenlash

Putting people at the heart of climate action in Europe

We need a ‘Marshall Plan’ for housing


Addressing Europe’s housing crisis

By increasing supply, sound housing policies and thinking beyond housing
Find all related news

FEPS at UN Civil Society Conference in Kenya


Notice of vacancy – Policy analyst on international relations


FEPS celebrates 20 years of the biggest EU enlargement


FEPS welcomes the signing of the La Hulpe Declaration

Find all related in the media
In the media

Edição especial sobre as eleições europeias já nas bancas

by SÁBADO 21/05/2024
"Special Edition on the European Elections Now Available on Newsstands" Read the special edition by SÁBADO focusing on the European election in Portugal, with an interview by Maria João Rodrigues, FEPS President

Youth unemployment hurts communities, its time for a new deal, says Andor

by Euractiv 15/05/2024
Read FEPS Secretary General László Andor's interview on the consequences of youth unemployment for communities

A reform az európai parlamenti választás tétje

by Új Szó 14/05/2024
In this interview, FEPS Secretary-General László Andor discusses the 2024 European Parliament elections and current issues facing the EU

Alleen de Europese Unie kan de mensen echt beschermen

by Sampol 07/05/2024
'Only the European Union can really protect people' In Sampol's article, FEPS President Maria João Rodrigues analyses the current state of the European Union in the run-up to the European elections