28 November 2012

VP Rehn: Blueprint for a Deep and Genuine EMU

Speaking after the Commission had adopted the blueprint outlining the short-, medium- and long-term plan for rebuilding the EMU, Rehn said that as well as creating a sketch of the final EMU architecture, the blueprint also provided a credible, realistic building plan for completing construction.

The sequencing of the various steps is an essential aspect of the blueprint, as President Barroso explained, and we have taken into account in a balanced way the economic theory of an economic and monetary union, the political reality we operate under, as well as the legal requirements within the Treaties and beyond. But we are firmly leaning on the Community method and on the existing institutions.

The guiding principle of this blueprint is that steps toward further mutualisation of economic risk and solidarity need to be combined with deeper integration of decision-making and responsibility.

Let me highlight three concrete elements quite briefly concerning this blueprint. We have in mind in the short-term several concrete proposals within the current Treaties and based on secondary legislation. In order to improve the functioning of the EMU, the existing framework of the economic governance for the euro area should be further strengthened through ensuring ex ante coordination of major economic reforms and following the decision of the next Multi Annual Financial Framework through the creation of a Convergence and Competitiveness instrument to provide support for the timely implementation of structural reforms.

My second point is indeed the Convergence and Competitiveness Instrument, which would support reforms that are recommended in the country specific recommendations so that they are in reality implemented even when they are politically and economically difficult in the short term, especially in more vulnerable member States. This instrument would combine deepening integration of economic policy with financial support and thereby respect the principle according to which steps towards more solidarity have to be combined with responsibility and economic rigour.

And third, the intent to pursue a strengthening and consolidation of external representation of the euro area. We see that this is essentially in fact necessary to ensure that the euro area is represented in such a manner that is commensurate with its economic weight and the strengthening of its internal economic governance. In our view the euro area must be able to deliver a single message on issues of economic and fiscal policy, macroeconomic surveillance, exchange rate policies and financial stability, be it in the G20, in the IMF, G7 or G8, in multilateral economic institutions and with our strategic partners bilaterally. And ultimately we would aim for a single seat for the EU or for at least the euro area in the International Monetary Fund.

Full speech

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