My research on the European Monetary Union maps the euro area as a web of interlocking balance sheets. It shows how crises since 2008 have transformed Europe’s monetary and fiscal architecture, from the TARGET system and repo markets to EU fiscal agencies, and why the euro remains embedded in the Offshore Dollar System.
The European Monetary Union is an unusual experiment in monetary history. Its design made only central bank money European, while bank deposits and shadow money such as repos remained largely national. After a decade of calm, the Eurocrisis exposed this incomplete integration: hidden runs on the lower tiers of the money hierarchy threatened “par”, the one-to-one exchange rate between euros created in different member states, and brought the union close to breaking apart. In the DFG-funded project “Hierarchical and Hybrid Money on a Fractured Continent”, carried out at Boston University’s Global Development Policy Center, I mapped the euro area’s monetary architecture in detail, resulting in three GEGI Studies and the interactive Monetary Architecture online tool.
The Eurozone architecture embedded in the global Offshore Dollar System. Figure from Murau (2020), GEGI Study, © Steffen Murau (CC-BY). Click to enlarge.
The crisis responses transformed the architecture beyond the Maastricht blueprint, without a plan. With co-authors, I have analyzed how the TARGET system became an emergency backstop that holds the union together, how the funding of sovereign debt was outsourced to procyclical repo markets, and how quantitative easing compensated for their failure. On the fiscal side, the EU has governed around its fiscal rules through a growing ecosystem of off-balance-sheet fiscal agencies, up to the Recovery and Resilience Facility.
A further finding links this work to my research on the dollar: the euro area is embedded in, and dependent on, the Offshore Dollar System. US dollar credit has grown relative to euro credit within the euro area since the Eurocrisis, which helps explain why the “strategic autonomy” of the euro is hard to achieve. My current work asks how the European monetary architecture can be developed to be fit for a more contested geoeconomic environment.
Key publications
- ‘A Macro-Financial Model of the Eurozone Architecture Embedded in the Global Offshore US-Dollar System’, GEGI Study, Global Development Policy Center, Boston University, 2020.
- ‘The Eurozone’s Evolving Fiscal Ecosystem. Mitigating Fiscal Discipline by Governing through Off-Balance-Sheet Fiscal Agencies’ (with Andrei Guter-Sandu), New Political Economy, 2022.
- ‘Forging Monetary Unification through Novation. The TARGET System and the Politics of Central Banking in Europe’ (with Matteo Giordano), Socio-Economic Review, 2024 (honourable mention, best articles of 2024).
- ‘Encumbered Security? Vertical and Horizontal Repos in the Euro Area and Their Inherent Ambiguity’ (with Alexandru-Stefan Goghie and Matteo Giordano), Journal of Financial Regulation, 2025.
- ‘Rethinking Currency Internationalisation. Offshore Money Creation and the EU’s Monetary Governance’ (with Jens van ’t Klooster), Journal of European Public Policy, 2026.
- ‘The Hardwired Dollar DNA of the European Monetary Union’ (with Torsten Ehlers), Economy and Society, forthcoming.
All publications are listed under Publications.
