On the Amato et al. proposal for a European Debt Agency: a preliminary legal analysis

This working paper offers a preliminary legal analysis of the proposal for a European Debt Agency (EDA) advanced by a team of economists led by Massimo Amato. EDA represents a ground-breaking initiative to address the complex challenges of sovereign debt management within the European Union. Fundamentally, it seeks to reimagine how EU Member States manage their public debt, offering a sophisticated solution that aims to balance market efficiency, fiscal responsibility, and economic stability. This working paper aims to determine whether the establishment of EDA is feasible within the existing EU legal framework. To this end, the paper first explains EDA’s functioning, then assesses its compatibility with the existing EU Treaties, and examines different alternative ways EDA could be built. Finally, the paper explores EDA’s possible institutional design and its relationship with EU fiscal rules. Given the current challenging international scenario, massive defence investments will compel indebted Member States to deviate from fiscal rules, potentially triggering market tensions and deteriorating public finance balances with increased risks for the most vulnerable economies. A coordinated European response, such as establishing a European Debt Agency, could mitigate these risks by efficiently managing defence financing across member countries. Therefore, the legal evaluation of the EDA has nowadays acquired an unprecedented relevance.