The Political Economy of Financing Large-Scale Transformations
Off-Balance-Sheet Fiscal Agencies in Wars, Reconstruction, and the Green Transition
The OBFA-TRANSFORM project. An Emmy Noether research group
The Green Transition—a politically desired large-scale transformation of physical capital stock to reach net-zero carbon emissions—is the greatest challenge of our age. We broadly know what technically needs to happen, but one question remains unsettled: Where should the money come from to pay for it?
Objectives
Key concepts
A methodology to represent historically specific monetary and financial systems as a web of balance sheets that comprises different monetary and fiscal institutions and interlocks via different credit instruments.
Public-private entities whose activities combine traces of monetary and fiscal policy, and can play a critical role to steer monetary architectures in a large-scale transformation.
The systemic financing of a large-scale transformation requires an initial balance sheet expansion long-term funding, and eventually a final contraction of the balance sheets in a monetary architecture.
The ‘triad’ of taxation, government borrowing, and central bank money creation are conventionally seen as the avalaible policy options for a state to finance large-scale transformations.
Case studies
War finance
OBFAs played a pivotal role in financing military expenditure in North America and Europe throughout the 20th century. Setting up OBFAs not only enhanced credit money creation at an unprecedented scale but also transformed the monetary architectures for good.
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Reconstruction finance
OBFAs were commonly used to finance the economic reconstruction after wars and major crises. Some OBFAs were phased out, others remain part of the monetary architecture until today.
find out moreGreen Transition finance
OBFAs are among the most promising financing techniques if the Green Transition is to succeed. Not only can they provide balance sheet elasticity themselves, they may also serve to steer today’s largely privatized monetary architectures towards a predetermined political goal.
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Team
OBFA-TRANSFORM Working Paper Series
The OBFA-TRANSFORM Working Paper Series publishes ongoing research output by the group that applies the Monetary Architecture framework and the OBFA concept on various contemporary and historical subjects.
find out morePublications
Peer-reviewed journal articles
Murau, Steffen, Alexandru-Stefan Goghie, and Matteo Giordano (forthcoming) ‘Encumbered Security? Vertical and Horizontal Repos in the Euro Area and Their Inherent Ambiguity’, Journal of Financial Regulation, online first, https://doi.org/10.1093/jfr/fjaf003.
van ‘t Klooster, Jens, and Steffen Murau (forthcoming) ‘Rethinking Currency Internationalisation. Offshore Money Creation and the EU’s Monetary Governance’, Journal of European Public Policy, online first, https://doi.org/10.1080/13501763.2025.2497357.
Reimer, Friederike, Andrei Guter-Sandu, Armin Haas, and Steffen Murau (2025) ‘Schrödinger’s Off-Balance-Sheet Fiscal Agency. The Recovery and Resilience Facility and the Limits to Incremental Fiscal Integration in Europe’, Journal of European Integration, online first, https://doi.org/10.1080/07036337.2025.2491618.
Guter-Sandu, Andrei, Armin Haas, and Steffen Murau (2024) ‘Green Macro-Financial Governance in the European Monetary Architecture. Assessing the Capacity to Finance the Net-Zero Transition’, Competition and Change, online first, https://doi.org/10.1177/10245294241275103.
Murau, Steffen, Armin Haas, and Andrei Guter-Sandu (2024) ‘Monetary Architecture and the Green Transition’, Environment and Planning A: Economy and Space 56 (2), pp. 382-401, https://doi.org/10.1177/0308518X231197296.
Murau, Steffen, and Matteo Giordano (2024) ‘Forging Monetary Unification through Novation. The TARGET System and the Politics of Central Banking in Europe’, Socio-Economic Review 22 (3), pp. 1283-1312, https://doi.org/10.1093/ser/mwad067.
Golka, Philipp, Steffen Murau and Jan-Erik Thie (2024) ‘Towards a Public Sustainable Finance Paradigm for the Green Transition’, Finance and Society 10 (1), pp. 38-50, https://doi.org/10.1017/fas.2023.15.
Murau, Steffen, and Tobias Pforr (2023) ‘Shadow Money in the History of Monetary Thought’, Review of Political Economy, online first, https://doi.org/10.1080/09538259.2023.2272140.
Murau, Steffen, and Jens van ‘t Klooster (2023) ‘Rethinking Monetary Sovereignty. The Global Credit Money System and the State’, Perspectives on Politics 21(4), pp. 1319–1336, https://doi.org/10.1017/S153759272200127X.
Murau, Steffen, Fabian Pape, and Tobias Pforr (2023) ‘International Monetary Hierarchy through Emergency US-Dollar Liquidity. A Key Currency Approach’, Competition and Change 27(3-4), pp. 495–515, https://doi.org/10.1177/10245294221118661.
Golka, Philipp, Steffen Murau, and Jan-Erik Thie (2023) ‘Public Sustainable Finance. Von nachhaltigen Finanzmärkten zur sozialökologischen Transformation’, Vierteljahrshefte zur Wirtschaftsforschung , 92 (1), pp. 97–112, https://doi.org/10.3790/vjh.92.1.97. https://elibrary.duncker-humblot.com/pdfjs/web/viewern.html?file=https://elibrary.duncker-humblot.com/pdf/article/72432/10_3790_vjh_92_1_97_01692463495_L.pdf
Reports and Working Papers
Murau, Steffen, and Herman Mark Schwartz (2025) ‘Decoding Dollar Dominance. The Global Credit View on the Monetary System in International Political Economy’, OBFA-TRANSFORM Working Paper No. 5-EN, April 2025, Berlin: Global Climate Forum. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5240787.
van ‘t Klooster, Jens, and Steffen Murau (2025) ‘Rethinking Currency Internationalisation. Offshore Money Creation and the EU's Monetary Governance’, OBFA-TRANSFORM Working Paper No. 4-EN, January 2025, Berlin: Global Climate Forum. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5122161
Reimer, Friederike, Andrei Guter-Sandu, Armin Haas, and Steffen Murau (2024) ‘Schrödinger’s Off-Balance-Sheet Fiscal Agency. The Recovery and Resilience Facility and the Limits to Incremental Fiscal Integration in Europe’, OBFA-TRANSFORM Working Paper No. 3-EN, September 2024, Berlin: Global Climate Forum. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4951467
Haas, Armin, Friederike Reimer, Andrei Guter-Sandu, and Steffen Murau (2024) ‘The Mefo Operation. A Macro-Financial Analysis of Camouflaged Sovereign Borrowing through Off-Balance-Sheet Fiscal Agencies, 1933-1945’, OBFA-TRANSFORM Working Paper No. 2-EN, August 2024, Berlin: Global Climate Forum. https://papers.ssrn.com/abstract=4929301
Laudage, Gregor, Armin Haas, Andrei Guter-Sandu, and Steffen Murau (2024) ‘State Finance Beyond the Core Budget. Off-Balance-Sheet Fiscal Agencies in Germany’s Fiscal Ecosystem‘, OBFA-TRANSFORM Working Paper No. 1-EN, July 2024, Berlin: Global Climate Forum. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4910502
Laudage, Gregor, Armin Haas, Andrei Guter-Sandu, and Steffen Murau (2024) ‘Staatsfinanzen jenseits des Kernhaushalts. Bilanzexterne Fiskalagenturen im deutschen fiskalischen Ökosystem‘, OBFA-TRANSFORM Working Paper Nr. 1-DE, Juli 2024, Berlin: Global Climate Forum. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4910502
Murau, Steffen, Alexandru-Stefan Goghie and Matteo Giordano (2024) ‘Encumbered Security? Conceptualising Vertical and Horizontal Repos in the Euro Area’, SOAS Department of Economics Working Paper No. 262, London: SOAS University of London. https://www.soas.ac.uk/sites/default/files/2024-04/economics-wp262.pdf
Murau, Steffen (2024) Staatsverschuldung und Transformation der monetären Architektur in Preußen und dem Deutschen Kaiserreich, 1740-1914, Dezernat Zukunft. Institut für Makrofinanzen, Hintergrundpapier, 26. Februar 2024. https://www.dezernatzukunft.org/staatsverschuldung-und-transformation-der-monetaeren-architektur-in-preussen-und-dem-deutschen-kaiserreich-1740-1914/
Murau, Steffen (2023) Sovereign Debt Issuance and the Transformation of the Monetary Architecture in Prussia and the German Empire, 1740–1914, Dezernat Zukunft. Institute for Macrofinance, Background Paper, 28 July 2023. https://www.dezernatzukunft.org/sovereign-debt-issuance-and-the-transformation-of-the-monetary-architecture-in-prussia-and-the-german-empire-1740-1914/
Haas, Armin, Andrei Guter-Sandu and Steffen Murau (2023) Times of Branching? The BRICS Currency Initiative and Twelve Possible Futures for the International Monetary System, Paper prepared for the Post-Keynesian Conference in Lille. https://pklille2023.sciencesconf.org/data/pages/Haas_et_al_A_better_planet_for_Keynes_descendants_session_A_1.pdf
In the media
Simon Zeise (2024) ‘Ukraine. Streit um den Bundeshaushalt eskaliert – kommt jetzt die Kriegsanleihe?’, Berliner Zeitung, 30 June 2024. https://www.berliner-zeitung.de/politik-gesellschaft/geopolitik/ukraine-streit-um-den-bundeshaushalt-eskaliert-kommt-jetzt-die-kriegsanleihe-li.2229383
Mark Swilling (2023) ‘Financing Just Transitions at Global, Regional and National Levels’, Speech Delivered at UNCTAD meeting, 3 November 2023. https://www.markswilling.co.za/2023/11/financing-just-transitions-at-global-national-and-local-levels/
Mark Swilling (2023) ‘Making Hope Possible — Reflections of a Former Chairperson of an SOE Board’, Daily Maverick, 8 October 2023. https://www.dailymaverick.co.za/article/2023-10-08-making-hope-possible-reflections-of-a-former-chairperson-of-an-soe-board/
Mark Swilling (2023) ‘Reflections of an Enraged Incrementalist – What Must Be Done Next?’, Daily Maverick, 8 September 2023. https://www.dailymaverick.co.za/article/2023-09-08-reflections-of-an-enraged-incrementalist-what-must-be-done-next/
Murau, Steffen (2023) ‘One Currency to Rule Them All’, IPG Journal, 23 August 2023. https://www.ips-journal.eu/topics/economy-and-ecology/one-currency-to-rule-them-all-6933/
Emily Schultheis (2023) ‘Is Berlin Ready to Break the Bank? Germany is Obsessed with Avoiding Debt. But Retrofitting the Country May Require Taking It On’, Foreign Policy, 13 June 2023. https://foreignpolicy.com/2023/06/13/germany-debt-break-black-zero-spending-economics-climate-war-scholz/
Armin Haas, Andrei Guter-Sandu, and Steffen Murau (2023) ‘Horrorszenario für die Welt. Droht ein Zahlungsausfall der USA?’, Tagesspiegel, 3 May 2023. https://www.tagesspiegel.de/internationales/horrorszenario-fur-die-welt-droht-ein-zahlungsausfall-der-usa-9749696.html