Editors: Kristijan Kotarski, Associate Professor, University of Zagreb

This paper sheds light on key topics pertaining to the future of debt, money, and banking from the EU from a liberal perspective. It consists of six sections. The first two sections deal with underlying factors behind the recent bout of inflation in the EU. While the first section finds them in the supply shocks that have recently buffeted EU economies, the second section provides a counterpoint and outlines the role of demand shocks. The third section summarises the previous findings and enumerates key lessons from the current crisis for both the ECB and EU policymakers in charge of structural and fiscal policies. Section four sketches the vision for the reform of fiscal rules in the EU and how to ensure better division of work between common monetary and national fiscal policies. Section five is focused on the role of the financial sector in ensuring dual goals of financial stability and growth.

The roadmap for the reform of the banking union, as well as for the creation of the capital markets union, is presented to the reader. This section also briefly touches upon the issue of financial innovation, with the concomitant trend of digital private currencies and pioneering efforts on behalf of central banks to introduce CBDCs. The final section concludes the analysis.

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