The paper shows how the EU has developed its fiscal authority, by means of the surveillance mechanisms over the budgets of the Member States (Stability and Growth Pact; Fiscal Compact, Six-Pact and Two-Pack). In addition, I will show the development of the EU budget; the quasi-fiscal instruments, like the European Stability Mechanism (ESM), created outside the EU legal framework; as well as the quasi-fiscal policy of the European Central Bank (ECB). I will argue that, by avoiding fiscal union, the EU has blurred the boundaries between the responsibilities of the member states and the EU. As a result, the EU has encroached on the ‘core power’ of the states, i.e. fiscal policy and has thus placed limits on their sovereignty in this respect. Consequently, the EU has gained a final say in some aspects of the fiscal policies of the member states, a process that I call ‘fiscal federalization’.
