No. 57: The Next Generation EU Bond as Security and Next Step in EU Integration


  • Vendel Halász
Publish Date:
March 26, 2022
Publication Title:
European Union [EU] Law Working Papers
Stanford Law School
Working Paper
  • Vendel Halász, The Next Generation EU Bond as Security and Next Step in EU Integration, EU Law Working Papers No. 57, Stanford-Vienna Transatlantic Technology Law Forum (2022).
Related Organization(s):


As a result of the coronavirus crisis, the European Union (EU) had to face unprecedented challenges during the years of 2020 and 2021. This crisis put to the trial the economic, social and health care systems of the EU Member States and also the solidarity among them. To handle the crisis, the EU adopted the ground-breaking Next Generation EU (NGEU) program and to ensure its financial background authorization was given to the European Commission to issue debt securities worth of maximum EUR 750 billion on behalf of the EU.
The paper examines the circumstances which led to the establishment of this new and exceptional temporary recovery instrument. As a basis of the research, it introduces the legal and economic background of debt security issuances in the EU and the legal framework regarding the EU as the issuer of debt securities. Strong emphasis is given on the Support to mitigate Unemployment Risks in an Emergency (SURE) program, which can be considered as the forerunner of NGEU. The most important part of the paper introduces the NGEU and the related debt security issuance program in detail. The legal aspects of NGEU and NGEU bonds regarding European integration are especially highlighted. The paper intends to find answers to the questions that what kind of effects do NGEU and the related bond issuance have on the EU? Is it well-founded to consider this achievement as the next step in European integration?
The paper is on the conclusion that NGEU and the related developments obviously all hint at the direction of a stronger European integration and solidarity. For example, NGEU represents the first large volume borrowing (bond issuance) of the EU and it introduced a new guarantee and liability sharing mechanism. New (and temporarily enhanced) system of own resources was considered necessary in connection with NGEU and the appropriate administrative, regulatory and institutional background of debt management was established. The protection for the EU’s financial interests and values was also strengthened. The NGEU introduced new common policy objectives for the EU and ensured the necessary funds for their achievement. Some commentators even argue that Europe already reached a ‘Hamiltonian moment’ as a consequence of NGEU.
However, the Conclusions of the paper emphasize that NGEU was adopted as an exceptional and temporary emergency mechanism, which has ad hoc and ex post nature. Such a mechanism in itself cannot be considered as a next step in EU integration. If a similar instrument as NGEU would be established in the EU as a permanently available mechanism to treat future challenges, then this achievement definitely would represent a next step in EU integration. The reason is that the establishment of such a mechanism would confer significant new powers permanently to the EU, so a new and significant EU competence would arise. Considering the past crises in the 21st century, this paper predicts strong probability regarding the establishment of such ex ante and permanent risk sharing mechanism. However, whether the NGEU will evolve further to such a mechanism will largely depend on its success. Based on that, this paper emphasizes the important role of those politicians and bureaucrats who are taking part in the implementation of NGEU.