The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (“FiscalCompact”) was concluded by Heads of State or Government of 25 EU Member States in March 2012 asanother instrument the objective of which is strengthening the fiscal discipline and stabilization of the euroarea as a whole. Similar to the preceding initiative – the Euro Plus Pact – this treaty also envisages deeper coordinationof economic policies of the participating Member States. It is, however, a legally binding agreementin which not all EU Member States participate and which was concluded outside the framework of the EUlaw. The article deals with legal but to some extent also economic aspects of the Fiscal Compact and it focusesin particular on four problematic issues: 1) its relationship to EU law and ensuing obligations for the MemberStates; 2) the use of EU institutions for its implementation; 3) its relationship to the Czech Constitution andevaluation of its constitutional classification; 4) the question to what degree it changes the functioning ofthe economic and monetary union within the euro area.
Both parts of the institution of “economic and monetary union” are constructed in different wayswithin European law. The economic part is built upon the decentralized structure of the European Union asa “community of states”; the monetary union is based upon the delegation of monetary powers from individualstates – their central banks – to the Union level. Serious crises of functioning of such a model broughtup the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. TSCG is partof a gradual strategy of the centralization of budgetary policy at the level of the European Union. This strategyis built upon presumption that effective functioning of the monetary union must be supported by a centralbudget and central, or centralized, budgetary policy.