Osnabrück JMCE Award Series Nr. 07 (2013) - The Currency of Institutions: EMU Development 2010-2012

This master thesis explores the institutional development of the European Economic and Monetary Union (EMU) between 2010 and 2012. It aims at analyzing why EMU developed in a gradual manner during its most severe crisis. Why was EMU’s institutional structure reformed incrementally instead of an immediate break-up or an ambitious major institutional overhaul, which were also possible outcomes under the massive pressure of the euro crisis? Based on the theory of historical institutionalism, the main hypothesis is that EMU’s current development was constrained by its former institutional set-up. Thus, it is argued that the special form of gradual – nevertheless significant – institutional change which occurred within EMU between 2010 and 2012 depended on prior institutional conditions which did not favor rapid change. In order to explain the content of EMU’s institutional reforms, the ideas of the major policymakers are also analyzed. The study is conducted by examining the historical institutional preconditions and the types of recent institutional changes within three policy fields: monetary policy, fiscal and economic policy, and financial surveillance. The main findings are that a conversion of the ECB to a lender of last resort took place within monetary policy, and that new EU-level layers were added to EMU’s former institutional structure of fiscal and economic policy coordination and financial surveillance cooperation. Political actors’ ideas turned out to be decisive for the content of the reforms