The Bank, the Bond and the Bail-Out: On the Legal Construction of Market Discipline in the Eurozone

Schepel, Harm (2017) The Bank, the Bond and the Bail-Out: On the Legal Construction of Market Discipline in the Eurozone. Journal of Law and Society, 44 (1). pp. 79-98. ISSN 0263-323X. (doi:https://doi.org/10.1111/jols.12015) (Full text available)

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Abstract

The ‘logic of the market’, so holds the Court of Justice, is the standard of legality of financial assistance to indebted member states under EU law and, ultimately, the legal justification for strict conditionality and the imposition of austerity. This logic of the market, though, is different from actual market behaviour. Austerity, it turns out, is not the inevitable response to market pressures but a function of political substitutes for market discipline (Pringle) and technocratic truth seeking about the ‘correct’ price of debt (Gauweiler) which the Court has frozen into law. The perverse consequence of making the modalities of financial assistance dependent on the ‘logic of the market’ is, moreover, to render the assistance as ineffective and expensive as possible. ‘The logic of the market’ in the Court's case law is best seen as punitive and cynical politics masquerading as inept economics.

Item Type: Article
Subjects: K Law
Divisions: Faculties > Social Sciences > Kent Law School
Depositing User: Sarah Slowe
Date Deposited: 06 Dec 2016 06:32 UTC
Last Modified: 03 Nov 2017 00:00 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/59459 (The current URI for this page, for reference purposes)
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