December 06, 2017

EC set out a roadmap, in addition to certain key measures, to deepen the Economic and Monetary Union (EMU) in Europe. The overall aim is to enhance the unity, efficiency and democratic accountability of Europe's EMU by 2025. Building on the vision set out in the Five Presidents' Report of June 2015 and the Reflection Papers on the Deepening of the Economic and Monetary Union and the Future of EU Finances of spring 2017, EC set out the roadmap, including concrete steps to be taken over the next 18 months.

Deepening the EMU is a means to an end: more jobs, growth, investment, social fairness and macroeconomic stability. The single currency offers protection and opportunities to Europeans, along with a strong and stable euro area is essential for its members as well as for the EU as a whole. There have been important institutional reforms to strengthen Europe's EMU in recent years but its architecture remains incomplete. Roadmap reflects remaining challenges and sets out the way ahead. In addition to the roadmap, concrete steps are to be taken, including the following four main initiatives:

  • A proposal to establish a European Monetary Fund (EMF), anchored within the EU's legal framework and built on the well-established structure of the European Stability Mechanism (ESM). It would thus continue to assist euro area member states in financial distress. In addition, the EMF would provide the common backstop to the Single Resolution Fund and act as a last resort lender to facilitate the orderly resolution of distressed banks.
  • A proposal to integrate the substance of the Treaty on Stability, Coordination and Governance into the Union legal framework, taking into account the appropriate flexibility built into the Stability and Growth Pact and identified by the Commission since January 2015.
  • A Communication on new budgetary instruments for a stable euro area within the EU framework, setting out a vision of how certain budgetary functions essential for the euro area and the EU as a whole can be developed within the framework of the EU's public finances of today and tomorrow. The Communication discussed four specific functions: support to member states for structural reforms through a reform delivery tool and technical support at the request of member states; a dedicated convergence facility for member states on their way to joining the euro; a backstop for the Banking Union, through the EMF/ESM, to be agreed by mid-2018 and made operational by 2019; and a stabilization function to protect investments in the event of large asymmetric shocks.
  • A Communication spelling out the possible functions of a European Minister of Economy and Finance, who could serve as Vice-President of the Commission and chair the Euro group, as is possible under the current EU Treaties.

The EC Vice President Valdis Dombrovskis, in his speech at the press conference on the Economic and Monetary Union, said, “…today's proposals aim at strengthening democratic accountability, by integrating the substance of the Treaty on Stability, Coordination and Governance into the Union legal framework. Sound public finances and fiscal buffers are important to make economies resilient to future shocks. Fiscal rules, such as those in the 2012 treaty, have helped define and enforce them. The current proposal does not affect the Stability and Growth Pact rules.”

 

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Keywords: Europe, Banking, EMU, EMF, ESM, Roadmap, EC

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