Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287366 
Year of Publication: 
2021
Citation: 
[Journal:] Constitutional Political Economy [ISSN:] 1572-9966 [Volume:] 32 [Issue:] 4 [Publisher:] Springer US [Place:] New York, NY [Year:] 2021 [Pages:] 502-522
Publisher: 
Springer US, New York, NY
Abstract: 
The establishment of a sovereign debt restructuring mechanism (SDRM) is one of the important issues in the academic debate on a viable constitution for the European Monetary Union (EMU). Yet the topic seems to be taboo in official reform contributions to the debate. Against this backdrop, the article identifies the SDRM interests of key players, including the European Commission, the European Parliament, the European Central Bank and national governments. The empirical section takes advantage of the recently established EMU Positions Database. The findings confirm political economy expectations: Low-debt countries support an EMU constitution that includes an insolvency procedure whereas a coalition of high-debt countries and European institutions oppose it. The analysis points towards a possible political-economic equilibrium for coping with sovereign insolvencies: an institutional set-up without an SDRM and with hidden transfers. Recent European fiscal innovations in response to the Covid-19 solvency shock confirm this prediction.
Subjects: 
Sovereign debt restructuring mechanism
Banking regulation
EMU reform
Fiscal union
JEL: 
H63
H87
F53
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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