A better future for the EMU?

The fifth among the ten priorities in the political guidelines for the Juncker Commission is a deeper and fairer economic and monetary union (EMU). The blog post Future of Europe: introducing deepening EMU mentioned the Five Presidents’ Report, officially Completing Europe’s Economic and Monetary Union, from June 2015. On pages 4-5 the presidents set out the basic elements:

Progress must happen on four fronts: first, towards a genuine Economic Union that ensures each economy has the structural features to prosper within the Monetary Union. Second, towards a Financial Union that guarantees the integrity of our currency across the Monetary Union and increases risk-sharing with the private sector. This means completing the Banking Union and accelerating the Capital Markets Union. Third, towards a Fiscal Union that delivers both fiscal sustainability and fiscal stabilisation. And finally, towards a Political Union that provides the foundation for all of the above through genuine democratic accountability, legitimacy and institutional strengthening.

In other words, the euro area was far from robust and resilient.  

Perish the thought that desirable reforms should be should be done at once and in their entirety. The Five Presidents’ Report foresaw a protracted process (page 5):

Stage 1 (1 July 2015 - 30 June 2017): In this first stage (‘deepening by doing’), the EU institutions and euro area Member States would build on existing instruments and make the best possible use of the existing Treaties. In a nutshell, this entails boosting competitiveness and structural convergence, completing the Financial Union, achieving and maintaining responsible fiscal policies at national and euro area level, and enhancing democratic accountability.

Stage 2: In this second stage (‘completing EMU’), concrete measures of a more far-reaching nature would be agreed to complete EMU’s economic and institutional architecture. Specifically, during this second stage, the convergence process would be made more binding through a set of commonly agreed benchmarks for convergence that could be given a legal nature. Significant progress towards these standards – and continued adherence to them once they are reached – would be among the conditions for each euro area Member State to participate in a shock absorption mechanism for the euro area during this second stage.

Final Stage (at the latest by 2025): At the end of Stage 2, and once all the steps are fully in place, a deep and genuine EMU would provide a stable and prosperous place for all citizens of the EU Member States that share the single currency, attractive for other EU Member States to join if they are ready to do so.

Despite the laborious progress, outlined in more detail in a roadmap for the first two stages, much should have been done already on the road to the deep and genuine EMU (Eurozone) with democratic legitimacy (Annex 1; pages 20-21).

Ralf Grahn

Future of Europe: introducing deepening EMU

In the blog entry Future of Europe to meet European Council about the winds of change from the European Parliament, the European Commission and president Emmanuel Macron, we saw the:

White Paper on the Future of Europe: Reflections and scenarios for the EU27 by 2025; Brussels, 1.3.2017 COM(2017) 2025 final

The White Paper promised to deliver further food for thought and debate through five thematic papers, among which (page 18):

The European Commission will contribute to that discussion in the months ahead with a series of reflection papers on the following topics:

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• deepening the Economic and Monetary Union, on the basis of the Five Presidents' Report of June 2015;

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Five President’s Report

Published in June 2015, the 23-page Five President’s Report, officially Completing Europe’s Economic and Monetary Union, was authored by the president of the European Commission Jean-Claude Juncker “in close cooperation with” the president of the European Council and the euro summit Donald Tusk, the president of the Eurogroup Jeroen Dijsselbloem, the president of the European Central Bank Mario Draghi and the president of the European Parliament Martin Schulz.  

EMU Reflection paper

Two years later came the update in the form of:

Reflection paper on the deepening of the economic and monetary union; Brussels, 31.5.2017 COM(2017) 291 final (34 pages)

Alternatively, access the White Paper and the reflection papers through the Commission web page White paper on the future of Europe and the way forward.

Introductory notes  

In Finnish I looked at the deepening of the economic and monetary union (EMU) and the Five Presidents’ Report in the blog post Euroopan tulevaisuus: talous- ja rahaliiton syventäminen and at the EMU reflection paper in the entry Pohdinta-asiakirja talous- ja rahaliiton syventämiseksi.

The Swedish blog post Norden i EU-utkanten? described how scattered the Nordic countries are with regard to the defence alliance NATO and the European Union. Iceland and Norway remain outside the EU, and even the EU members Denmark and Sweden continue on the periphery, showing no signs of adopting the euro, while  leaving Finland the sole Nordic participant in the euro area, the core group of 19 countries with a total population of 341 million.

In Vitboken om EU:s framtid i Norden I tried to find signs of activity regarding the future of Europe, by the governments or parliaments of the Nordic EU members Denmark, Finland and Sweden, concerning the White Paper from the European Commission. (The article Diskussionsunderlaget om EU:s sociala dimension i Norden moved from the general level to explore the reception of the reflection paper on the social dimension by these three countries. There are also a number of earlier blog posts in Finnish, Swedish or  English about the social market economy, the European social pillar and the EU social dimension. Most of them can be found through the entry Future of Europe: social dimension.)  

(The English entries A symbolic opportunity for the European Council and Future of Europe to meet European Council visited the summit level and general EU reform issues in an attempt to lay the groundwork for more specific questions, such as the individual reflection papers, with the creation of a credible EMU next in turn.)   

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Twitter reflects at least parts of the multilingual pan-European public debate about the future of the European Union under the hashtag #FutureOfEurope, while the Commission web page for the priority A deeper and fairer economic and monetary union offers a more specific tag #deepeningEMU, covering the policy areas: economic union, financial union, fiscal union, political union (and the European Pillar of Social Rights).

Ralf Grahn