Transformation of the eurozone architecture

The Eurocrisis is usually explained by excessive sovereign issuance, a weak Stability and Growth Pact, or missing supranational supervision. None of those explains how a US-centric run on shadow money reached some EMU treasuries and not others. Our answer: it travelled through euro-area repo markets and the Eurosystem's collateral framework.

Argument

Contagion across the private and public balance sheets of the eurozone and US monetary architectures was the endogenous force that determined the EMU's transformation into its contemporary shape, from the Global Financial Crisis to the 2014 asset purchase programmes.

Method

Structured process-tracing combined with balance-sheet visualisation of crisis dynamics, built on the macro-financial model in Murau (2020) and on primary and secondary sources. The scheme runs in three steps: on-balance-sheet contraction; activation of inbuilt elasticity-provision mechanisms; and, where those fail, innovation: enhanced elasticity space, new instruments, or new institutions.

Outputs

• Read the study on SSRN
• The framework
• The tool
• Methodological presentation, 2023

Related publications

• Murau, S., Goghie, A. and Giordano, M. (2025). Encumbered Security? Vertical and Horizontal Repos in the Euro Area and Their Inherent Ambiguity. Journal of Financial Regulation, 11(2). DOI
• Giordano, M. and Goghie, A. (2023). From Policy to Regime: the changing posture of the ECB between liquidity and collateral. SocArXiv Working Paper. DOI