Sanctions in the EMU Economic Pillar

In the context of the economic pillar of the EMU, “soft” coordination mechanisms are backed by “hard” sanctions under the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. Crisis-induced reforms have expanded the scope of EU sanctioning power and devised new procedural rules to facilitate their exercise. However, actual recourse to sanctions in EU economic governance has been so far negligible. This apparent paradox can be explained on two accounts. On the one hand, the EMU enforcement machinery provides for a considerable degree of flexibility. On the other hand, alternative or complementary means of enforcement, based either on the power of financial markets or on conditionality, have emerged, reducing the need to resort to formal sanctions. The Chapter critically analyses these trends and points to the main legal problems they raise.