31 May 2017

Commission sets out possible ways forward for the deepening of Europe's Economic and Monetary Union

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, Financial Stability, Financial Services and Capital Markets Union, said: "The euro is one of Europe's most significant achievements. It is much more than just a currency. It was conceived as a promise of prosperity. To keep that promise for future generations, we need the political courage to work on strengthening and completing Europe's Economic and Monetary Union now. Today's reflection paper offers various ideas that should help building a shared vision for the euro as well as concrete steps to achieve it."

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "The euro is already a symbol of unity and a guarantee of stability for Europeans. We now need to make it a vehicle for shared prosperity. Only by reversing economic and social divergence in the euro area will we be able to defeat the dangerous populism that this fuels. The time has come to complete the journey we started at Maastricht towards a genuine economic and monetary union, with strong institutions and democratic accountability." [...]

Moving ahead would involve taking steps in three key areas:

1) completing a genuine Financial Union

An integrated and well-functioning financial system is essential for an effective and stable Economic and Monetary Union. Building on the momentum of what has already been achieved in recent years, a consensus needs to be found on the way forward. This includes moving ahead with elements that are already on the table and agreeing on additional steps to take between now and 2025. This will involve completing the Banking Union and making progress on reducing and sharing risks in the banking sector, with measures to make European banks even more resilient. In order to provide more diverse and innovative financing opportunities for the real economy, including through capital markets, delivering on Capital Markets Union is also paramount.

2) achieving a more integrated Economic and Fiscal Union

Already the Five Presidents' Report recognised the convergence towards more resilient economic and social structures in Member States as an essential element for a successful Economic and Monetary Union in the long run. Member States could strengthen already existing elements, such as the European Semester of economic policy coordination or the link of financial support from the EU budget to structural reforms. But Member States could also decide to improve the capacity of macroeconomic stabilisation of the euro area. The paper outlines several different options for this, which the Commission will look into.

3) anchoring democratic accountability and strengthening euro area institutions

For the Economic and Monetary Union to be stronger, Member States must accept to share more responsibilities and decisions on euro area matters, within a common legal framework. This could be through the EU Treaties and its institutions, an intergovernmental approach or, as is the case today, a mix of both. Further political integration could involve a rethinking of the balance between the Commission and the Eurogroup and could justify the appointment of a full-time permanent Eurogroup chair, as well as unifying the euro area's external representation. The idea of a euro area Treasury – possibly with a euro area budget – as well as a European Monetary Fund are also discussed in the public debate, and could be considered at a later stage of the deepening of Economic and Monetary Union, within the EU framework. [...]

Full paper

© European Commission