The economic governance review and its impact on monetary-fiscal coordination

This paper analyses how the fiscal framework proposed by the European Commission in April 2023 might affect the interplay between fiscal and monetary policies, from three perspectives: its impact on the medium-term fiscal stance in the euro area, its design, and its implications for the ECB’s Transmission Protection Instrument (TPI). It concludes with recommendations for amending both the fiscal governance proposal and the TPI. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 25 September 2023.