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Introduction
Europe has always experienced severe economic crises, which have crippled its markets and inevitably affected the collective well-being of society.
In 2012, Italy was facing a delicate phase in which public debt exceeded 120% of GDP (approximately 123% by the end of 2012, according to Istat and Bank of Italy data), youth unemployment reached 40%, and in a country struggling to make ends meet, the middle class disappeared.
Despite the various accusations aimed at the political class and the theories developed over time, it is considered necessary to analyze how the causes were far more structural and deeply rooted, largely stemming from previous mistakes in strategic economic choices that involved not only Italy, but all of Europe.
In 2010, the Greek economy collapsed due to a public debt that exceeded 144 percent of GDP, and the struggling ECB imposed harsh austerity policies in exchange for financial support, effectively marking the beginning of the country’s bankruptcy.
To explain what unites two such distant countries within the European Union, it is necessary to look overseas to a country that, alongside Europe, now forms what many describe as “the West”: the United States of America.
One recalls what is informally known in Italian as “la grande scommessa” or “the big short”: the 2008 subprime mortgage crisis, characterized by a speculative bubble in which American banks issued high-risk loans to finance the housing market, ultimately to inflate real estate prices and pursue a speculative strategy that faced mass borrower insolvency, leading to the collapse of the bonds issued to cover the credit—together forming one of the greatest market failures in history.
What does Europe have to do with all this? And why? If the speculative bubble was driven overseas through questionable monetary policies, why did the Old Continent suffer the consequences, which in some cases proved even more disastrous than in the United States?
The cause must be sought in a systematic attachment to U.S. monetary policies, which have always created imbalances first in Europe and then in the EU—an attachment that should prompt reflection on the actual autonomy Europe should have had, and still should have.
With this thesis, the goal is first to look to the past and analyze the historical mistakes made by European economic actors in placing trust in a united West, starting from the Bretton Woods agreements of 1944 and delving into the global consequences these pacts had in the aftermath of World War II.
The second chapter will focus on the analysis of the present, outlining how today’s events closely resemble past concerns.
The work also intends to conclude with a look toward the future and an in-depth analysis of Mario Draghi’s report on European competitiveness, which partially mentions the issue of U.S. monetary and fiscal dependency, opening the way to strategic considerations for a redefined European future.
The objective is to demonstrate when and how U.S. economic policy decisions have influenced Europe and its fiscal and monetary strategies in the past, present, and future.
It is considered particularly relevant to observe these interdependencies, which have been underestimated by many authors and economists in the past, supporting a growing bibliography aimed at achieving the strategic and economic independence of the European Union, with the hope for future empirical research that will thoroughly analyze the cause-effect relationships discussed in the following pages.
“The decadent and individualistic international capitalism, into whose hands we have fallen after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous—and it doesn’t even deliver the goods.”
— John Maynard Keynes, National Self-Sufficiency, The Yale Review, Vol. 22, 1933
Chapter I – Historical premises and systemic roots of dependency
The monetary and fiscal subordination of the European Union to the United States of America has deep historical roots, which must be sought within the framework of post-war agreements that shaped the architecture of the global financial system.
1.1 The Bretton Woods Agreement and the Failed Bancor
In 1944, forty-four countries met in Bretton Woods, New Hampshire, to rewrite the global financial order and guarantee the stability of exchange rates. Within this context, the United States, being the main creditor nation, assumed a leading role. At the center of the agreement was the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), institutions designed to facilitate monetary cooperation and international development.
The Bretton Woods system provided for fixed but adjustable exchange rates, with the U.S. dollar convertible into gold at a fixed rate of $35 per ounce. The other currencies were to maintain a fixed exchange rate with the dollar. This system effectively placed the dollar at the center of the global monetary system.
British economist John Maynard Keynes proposed an alternative: the Bancor, a supranational currency designed to act as a unit of account for international trade, managed by an International Clearing Union. The Bancor would have avoided imbalances by penalizing both surplus and deficit countries. However, the United States rejected the proposal, preferring a system that leveraged its economic strength and the dollar’s centrality.
Thus, from the beginning, a mechanism was established that made the rest of the world dependent on the dollar, a trend that would intensify with the years.
1.2 The End of Bretton Woods and the Oil Crisis
In 1971, President Richard Nixon unilaterally suspended the convertibility of the dollar into gold, effectively ending the Bretton Woods system. This decision, known as the Nixon Shock, inaugurated the era of floating exchange rates and definitively consolidated the dollar’s role as the main reserve currency without the constraint of gold.
The end of convertibility made international markets more unstable and exposed to speculative pressures. At the same time, the 1973 oil crisis, triggered by the OPEC embargo, showed how dollar dependence made economies vulnerable to exogenous shocks, especially those whose trade was denominated in dollars.
European countries, importing oil in dollars, suffered a double blow: on one hand, the rising price of oil; on the other, the devaluation of their own currencies relative to the dollar, which increased the cost of imports. Thus, the dollar system exacerbated economic vulnerabilities and triggered inflationary spirals that would haunt European economies for a long time.
1.3 From the Maastricht Treaty to the Euro: the Illusion of Autonomy
The 1992 Maastricht Treaty marked a fundamental turning point for European monetary integration. It established the criteria for entry into the Economic and Monetary Union (EMU), including limits on inflation, public deficit (maximum 3% of GDP), public debt (maximum 60% of GDP), and long-term interest rates.
The birth of the euro in 1999 and its physical introduction in 2002 were celebrated as a step forward toward European independence. However, the very architecture of the EMU concealed structural weaknesses: the absence of a true fiscal union and a common treasury made it impossible to respond effectively to asymmetric shocks. Each member state retained its fiscal policy but without the support of monetary sovereignty, which was instead delegated to the European Central Bank (ECB).
This created a paradoxical situation: while the United States could manage both its monetary and fiscal policy in a coordinated way, Europe found itself constrained by rules that limited deficit spending and the ability to respond to crises. This framework made the EU particularly vulnerable to the economic cycles and decisions of the Federal Reserve.
Moreover, the role of the dollar in international trade and as the world’s main reserve currency remained unchanged. Despite the euro’s emergence as a significant currency, its use in global reserves and in energy contracts remained limited. The petrodollar continued to dominate, confirming how the system established at Bretton Woods had evolved but not disappeared.
In this scenario, Europe remained entangled in a monetary dependency that could not be resolved solely through the adoption of a common currency.
1.4 The ECB and its original limitations: a Central Bank without sovereignty
When the European Central Bank was founded in 1998, it inherited a model oriented toward monetary stability, heavily influenced by the Bundesbank’s legacy. Its primary and almost exclusive mandate was to maintain price stability, with no explicit objective of full employment or support for government debt—unlike the Federal Reserve, which pursues a dual mandate: price stability and maximum employment.
The ECB was therefore structured as an independent authority, not subject to political influence but also deprived of the powers normally attributed to a true central bank: it could not directly finance member states nor act as a lender of last resort for sovereign debt.
This limitation became dramatic during the sovereign debt crisis of 2010–2012. While the United States implemented massive quantitative easing programs and the Fed acted decisively to purchase Treasury securities, Europe initially hesitated. Only in 2012 did Mario Draghi pronounce the famous phrase “whatever it takes” to save the euro, marking the beginning of a more active role for the ECB, though still constrained by treaties and by the heterogeneity of the euro area’s member states.
The dependence on U.S. monetary dynamics thus took a more subtle form: the Fed’s choices had global repercussions and often required corresponding adjustments in Europe, without Europe having the same tools or flexibility.
The European crisis of the 2010s therefore showed that the autonomy of the euro was only partial, and that the monetary architecture of the European Union remained, in fact, subordinated to the financial center of gravity represented by the United States.
Chapter II – The present: the mechanisms of U.S. influence on European policy
2.1 The 2008 crisis and the beginning of the European decline
The 2008 crisis, born in the United States from subprime mortgages and the collapse of the Lehman Brothers investment bank, soon spread globally. Europe, despite not being the epicenter, was deeply affected due to the high exposure of its banks to toxic assets and to the interdependence of international financial markets.
European governments, already burdened with significant public debt, were forced to intervene to save banking institutions, thus further increasing debt-to-GDP ratios and triggering a new phase of instability. Countries like Ireland, Spain, Portugal, and Italy found themselves at the center of speculative attacks on sovereign bonds.
Unlike the United States, which promptly adopted expansionary fiscal and monetary policies, the European Union responded with austerity: the Stability and Growth Pact, combined with pressure from Germany and the “Troika” (IMF, ECB, European Commission), imposed budget cuts and tax increases, worsening the economic recession and amplifying social tensions.
The different response models reflected the asymmetry between the two systems: while the United States, through the Federal Reserve and the Treasury, acted swiftly and in a coordinated manner, Europe remained fragmented, unable to promptly counter the crisis and heavily dependent on decisions made in Washington.
This phase marked the beginning of a process of relative decline in the global weight of the European Union, both economically and politically.
2.2 The spread between the Bund and the BTP as a tool of monetary pressure
During the European sovereign debt crisis, a key indicator captured public attention: the spread between Italian government bonds (BTPs) and German ones (Bunds), a numerical value that measures the difference in yield between the two ten-year securities.
Although formally an indicator of investor confidence, the spread soon became a political and media weapon, used to assess the “reliability” of national economic policies. A high spread implied greater risk and higher interest for debt refinancing—an issue that could seriously compromise the sustainability of public finances.
This situation placed countries like Italy under constant pressure from financial markets, where the behavior of investors—often large U.S. hedge funds or international rating agencies—contributed to fueling instability and influencing the political agenda.
The European Central Bank, initially reticent to intervene directly, only began to act decisively with Draghi’s announcement in 2012, through the Outright Monetary Transactions (OMT) program and subsequently with quantitative easing. However, it was now clear that Europe’s monetary sovereignty was fragile and conditional: subject to external shocks, to the expectations of markets largely shaped overseas, and without a true shared fiscal policy.
Thus, the spread became a symbol of Europe’s vulnerability to speculative dynamics rooted in a global financial system still centered on Wall Street and the dollar.
2.3 The ECB’s Quantitative Easing and the American precedent
The Federal Reserve, in response to the 2008 crisis, launched a series of large-scale asset purchases known as Quantitative Easing (QE), aimed at injecting liquidity into the system, lowering interest rates, and stimulating credit and investment. The United States was among the first to adopt this extraordinary tool on a massive scale, starting in 2009.
Europe, however, delayed the adoption of such measures due to institutional constraints and political divisions among member states. Only in 2015, seven years after the U.S., did the ECB launch its own version of QE, known as the Asset Purchase Programme (APP), which involved the purchase of public and private securities to increase money supply and stabilize prices.
The delay had a cost. While the U.S. economy began to recover robustly starting in 2010, Europe remained mired in a prolonged phase of stagnation and low inflation. The ECB’s action, though expansive, was constrained by the need to maintain neutrality among member states and by the obligation not to directly finance governments—limits absent in the Fed’s structure.
The ECB’s QE was, in a certain sense, a mirror of the American model, but a distorted one: with less force, fewer tools, and more political constraints.
This demonstrated how even in the adoption of innovative policies, Europe followed the path traced by the U.S., highlighting a dependency not only monetary, but also in terms of conceptual and strategic imitation.
2.4 The geopolitical use of the dollar and U.S. sanctions
Another dimension of the United States’ monetary power lies in the geopolitical use of the dollar as a tool of influence and control. Since a large part of international trade, particularly in commodities such as oil and gas, is denominated in dollars, the American financial system acts as a global clearinghouse.
This dominance allows the United States to impose economic sanctions not only on hostile countries, but also on foreign companies and financial institutions that operate in dollars or use the SWIFT system, which is largely controlled by the U.S.
Europe, despite having autonomous political interests—such as in the cases of Iran, Venezuela, or Cuba—has often had to comply with U.S. sanctions for fear of secondary sanctions or the exclusion of its banks from the American financial system.
This subordination became evident after the U.S. withdrawal from the Iran nuclear deal (JCPOA) in 2018. Despite the EU’s desire to continue economic relations with Tehran, most European companies ceased their operations for fear of repercussions from Washington.
This dynamic reveals the non-neutrality of the global monetary system: the dollar is not simply a medium of exchange, but an instrument of geopolitical coercion that conditions even the strategic autonomy of European foreign policy.
It is in this context that some initiatives for an alternative payment system to SWIFT (such as INSTEX) were born, but with limited results—once again confirming how Europe remains embedded in a system of monetary power that it neither governs nor fully controls.
2.5 Fiscal-military asymmetry and the limits of the European model
The structural asymmetry between the United States and the European Union does not end with monetary policy. One of the most evident differences lies in the ability to mobilize fiscal resources and project global power.
The United States possesses a federal budget, a Treasury Department with the power to issue bonds backed by a single sovereign state, and the political cohesion to implement coordinated stimulus plans. During the COVID-19 crisis, for example, the U.S. launched support packages amounting to over 25% of GDP, thanks to the joint action of Congress and the Fed.
In contrast, the European Union, lacking a genuine fiscal union, had to resort to exceptional and temporary instruments, such as the Recovery Fund, obtained through complex negotiations among member states. Even in the face of emergencies, the EU remains limited by the need for unanimity, national vetoes, and divergent interests.
To this must be added the military dimension: while the United States can rely on NATO but above all on its own armed forces and defense industry, Europe lacks a unified military structure and depends largely on the U.S. umbrella for its strategic security.
This fiscal-military imbalance reflects a broader geopolitical asymmetry: the United States not only controls the global monetary system but also possesses the economic, military, and technological levers to impose its will internationally.
Europe, although rich and politically sophisticated, often appears reactive and divided—still lacking that strategic autonomy that the Draghi Report will try to reintroduce into the debate, and which the following chapter will address more specifically.
Chapter III – The future: Draghi’s vision and strategic autonomy
3.1 The Draghi Report and the challenge of European competitiveness
In 2024, former ECB President and Italian Prime Minister Mario Draghi was entrusted by the European Commission with drafting a report on the future of European competitiveness. The aim was to provide guidelines for relaunching productivity, technological innovation, and economic sovereignty in the face of global transformations.
The so-called Draghi Report focuses on a central theme: Europe risks being marginalized in a world dominated by the technological, financial, and geopolitical rivalry between the United States and China. To avoid this, the European Union must act in a united, rapid, and strategic manner.
Among the proposals contained in the Report is the need to create a real Capital Markets Union, to direct investments toward sectors of the future such as artificial intelligence, the green transition, and digital infrastructure.
However, the report implicitly touches on a fundamental issue: the current architecture of the European Union—based on fiscal rules, rigid treaties, and a central bank with a limited mandate—is no longer adequate to compete with countries that can coordinate all levers of economic and industrial policy.
Draghi proposes greater fiscal integration, more joint European debt issuance, and the creation of a European “Treasury” capable of mobilizing resources and supporting common policies. In doing so, he acknowledges, albeit diplomatically, the necessity of breaking the inertia that has prevented Europe from asserting its autonomy.
3.2 Strategic sovereignty: a European project yet to be built
The concept of strategic sovereignty, increasingly invoked in European debates, refers to the capacity of the European Union to act independently on the international stage—politically, militarily, industrially, and monetarily—without being subordinated to the interests or decisions of external powers.
Draghi emphasizes the urgency of this sovereignty, which must be built in all critical areas: from semiconductors to defense, from energy to data. But without coordinated fiscal and monetary tools, sovereignty remains an empty shell.
A true strategic Europe would need:
A common budget capable of supporting counter-cyclical investments;
A European Treasury to coordinate public finances and issue joint debt;
A reformed ECB with a broader mandate, capable of balancing price stability with full employment and financial stability;
A common defense policy, no longer dependent solely on NATO or U.S. protection.
This design would require profound reforms of the Treaties and the political will of the member states to transfer parts of their national sovereignty in favor of a collective European sovereignty.
The challenge is therefore not only economic but also cultural and political: to overcome national resistances and adopt a long-term vision capable of freeing the EU from the structural dependency that has characterized it since the post-war period.
Conclusion
The purpose of this thesis was to explore the economic and structural dependence of Europe on the United States, with particular attention to the monetary and fiscal dynamics that have influenced the development of European institutions.
The historical analysis showed how the subordination of the Old Continent began with the post-war agreements, where the Bretton Woods system and the failure of the Bancor proposal laid the groundwork for a global system centered on the dollar. The end of convertibility in 1971 and the subsequent oil crisis further demonstrated how the power of the United States was not only economic but also monetary and geopolitical.
The creation of the euro and the European Central Bank represented an attempt to build an autonomous response. However, the absence of fiscal coordination, the lack of a European Treasury, and the narrow mandate of the ECB have left the EU vulnerable to external shocks and reactive in the face of crises originating overseas.
The 2008 crisis, the European sovereign debt crisis, and the current global challenges—such as the technological race and energy transition—have brought to light the structural fragilities of the Union. While the United States has demonstrated the ability to respond with coordinated monetary and fiscal policies, Europe has often remained tied to rigid treaties and internal divisions.
The analysis of the Draghi Report highlights the urgent need for a new strategy: to recover competitiveness, stimulate investments in critical sectors, and above all build a true strategic autonomy. Sovereignty, in this context, means the ability to act independently, to plan for the long term, and to protect one’s economic and political model.
Europe is now at a crossroads. It can choose to remain in a position of dependence, adapting to the choices of others, or it can decide to assert itself as an autonomous and credible global actor.
This thesis therefore hopes to contribute to the academic debate on the need for a European paradigm shift—one that starts from the recognition of past mistakes and aims toward a more sovereign, cohesive, and resilient future.
Matteo Maillmann