Until recently, the recognition to the European Union of the capacity to borrow from capital markets for spending purposes was considered almost inconceivable without a treaty amendment. When borrowing for spending was authorized under the Next Generation EU program to support the recovery of member states from the unprecedented consequences of the coronavirus, it was immediately faced with the suspicion that the pandemic was being used as a pretext to promote the creation of a fiscal and transfer union by the back door in violation of the principle of conferral. In its NGEU judgment, the German Federal Constitutional Court concluded that the authorization to borrow under the program could not be considered ultra vires. However, the ambiguous and controversial reasoning of the Constitutional Court gives rise to uncertainty as to whether the funding and financing model introduced by the recovery program could be used again in the future, beyond the exceptional circumstances of the pandemic. At the same time, it appears that, in this case, the Constitutional Court applied a considerably more restrained version of its ultra vires review compared to its recent case law on the asset purchase programs of the European Central Bank.

Stefan Eich’s The Currency of Politics offers us a new way of looking at the EU’s sustainable finance trend, one that allows us to see how the ‘greening’ financial transactions creates “green money” and thus intertwines with questions of justice and democracy. In this contribution I explore how The Currency of Politics can help us understand the significance and the constitutional implications of the transformation of the euro into the ‘currency of the green transition’ as it has been referred to by Eurogroup’s President in 2021. I show how the three trends of EU green bond issuance, granular sustainable finance regulation and the progressive greening of monetary policy are moulding the euro in a political sense as the ‘currency of the green transition’ as much as the legal tender. Euro currency becomes in this sense ‘a governance project’ for the sustainable transition. This perspective offers multiple points of engagement with the themes of Stefan Eich’s important book. For example, the claim of privatisation of money creation must be qualified to reflect on the implications of the granular way in which EU law defines what green money is. At the same time, while a ‘green currency’ creates spaces for engagement and new forms of organising a polity, it still remains largely removed from ordinary citizens as ‘technocratic’ rather than ‘democratic’ self-government.

In response to the recession brought about by the COVID-19 pandemic, EU-wide macroeconomic policy has launched an unprecedented coordinated fiscal expansion across the EU (Next Generation EU or NGEU), financed by issuing common debt. Given NGEU’s nature, it is essential to take fiscal spillovers into consideration when assessing the overall macroeconomic effects of this fiscal expansion. We quantify the effects of the additional public investment for all Member States in a rich macro-model with a trade structure. Our model suggests that, on average, GDP effects are around one-third larger when explicitly accounting for the spillover effects from individual-country measures. For small open economies with smaller NGEU allocations, spillover effects account for the bulk of the GDP impact. We also quantify key transmission channels.

The article examines the legal structure and constitutional consequences of ‘Next Generation EU’ (NGEU)—the innovative recovery fund that the European Union (EU) established to address the socio-economic consequences of the COVID-19 pandemic. The article sheds light on the complex normative constellation that was used to erect NGEU, and explains how this was satisfactorily done within the existing Treaty framework, by resorting to current legal bases. At the same time, however, the article underlines the profound constitutional consequences that NGEU has on the EU's architecture of economic governance. To this end, the article contrasts the strategy chosen to respond to the COVID-19 pandemic to that embraced to tackle the euro-crisis a decade ago, and concludes emphasising how NGEU significantly contributes to the federalisation of the EU, endowing its fiscal union with a fiscal capacity analogous to that of other federal regimes.