Supranational to sovereign? The institutional development of the European Commission’s borrowing capacity since 1990

Since the launch of the NextGenerationEU (NGEU) funding mechanism in 2021, the European Commission has fundamentally reformed the way it raises debt on capital markets. The Commission’s new ‘diversified funding strategy’ differs markedly from the back-to-back approach that it had previously operated for over thirty years. This new strategy has also transformed the European Union’s (EU) role on European capital markets, as the Commission has sought to become a ‘sovereign-style issuer’. In this article, we explain this momentous change to Commission debt management by drawing on insights from historical institutionalism. Despite incremental changes to the Commission’s borrowing framework since the 1990s, we argue that the reforms since 2021 can best be seen as a punctuated change that relied on the debt management approach developed at the European Stability Mechanism (ESM) a decade prior. These findings shed light on the profound institutional impact of NGEU on the Commission’s position on capital markets and the new role of joint borrowing in EU policymaking.