Majone, Giandomenico. (1997) "The political economy of regulatory federalism in the European Union". In: UNSPECIFIED, Seattle, WA. (Unpublished)
Monetary union, under the conditions specified by the Maastricht Treaty, will complete the development of the European Union (or rather of the European Community as the supranational ‘pillar’ of the Union) as a market-preserving multi-level system of governance. According to Weirgast (1995), a market-preserving federal system has three basic characteristics: a) member states have primary responsibility over the economy; b) a common market is ensured, preventing the national governments from using their regulatory authority to erect non-tariff barriers against the persons, goods and services from other members states; c) national governments face a hard budget constraint, that is, they have neither the ability to print money nor access to unlimited credit. The first criterion of market-preserving federalism is also satisfied by the EC. Of the three main functions of government in the socio-economic sphere--redistribution, macro-economic management, and regulation--the first two are still the responsibility of the national governments. The EC has neither the legal competence nor the financial resources to act in these areas in any significant way. Only the regulatory function is highly developed at the European level (Majone 1996) , and to emphasize this fact I speak of regulatory federalism, rather than of federalism tout court.
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