Rehn began by connecting the governance reform of EMU to the present policies and economic challenges of the EU, especially of the eurozone. "In my view, the long term of the EMU can only be ensured provided that the short term is on a solid and sustainable foundation", he said.
We have put in place a more robust and credible system to ensure sound public finances and to pursue structural reforms. And we have created a framework for preventing and correcting macro-economic imbalances. The new toolbox is already in action to support sustainable growth and consistent consolidation of public finances. It provides a necessary foundation for further steps to rebuild the EMU.
What are the possible next steps?
In the short term, we need to improve governance of the European financial system. The construction of a banking union will reinforce financial stability through more uniform and reliable arrangements for the supervision and resolution of banks. It will further reinforce financial stability by diluting the link between banks and the national sovereign.
Since the beginning of the crisis we have been redesigning Europe’s financial architecture, not least through the recent agreement on a Single Supervisory Mechanism and the establishment of the European Stability Mechanism last year. Next we move on with the second pillar of the banking union – the single resolution mechanism, with a single resolution authority and common resolution fund, financed through levies on the sector itself, to deal with failing banks in an orderly manner.
The possibility and rules for direct recapitalisation of banks by the ESM is another important feature of the banking union we are currently building.
Taken together, these steps towards the banking union represent a decisive contribution to the repair of the banking system in Europe.
What about the broader economic union? Where should we go from here?
Some difficult choices will have to be made. The Blueprint is based on the guiding principle that any steps towards increased solidarity and mutualisation of risk would have to be combined with increased responsibility and discipline: that is, with further sharing of sovereignty and deeper integration of decision-making. The Convergence and Competitiveness Instrument, which foresees targeted financial support for structural reforms, is a good example of how increased responsibility and increased solidarity can go hand in hand.
Our vision is firmly based on the Community method, which is the only way to ensure truly sustainable policy instruments and democratic legitimacy and accountability. This also includes bringing the current intergovernmental instruments into the Community framework. We also emphasise that with the further development of EMU, we must always ensure the integrity of the EU as a whole.
Finally, in order to promote the interests of EU citizens in the global scene, the euro area should be represented in a manner commensurate with its economic weight. To achieve these objectives, the Commission will present proposals for the external representation of the euro area in international economic and financial organisations and fora.
To conclude, as has been said, "the only place where success comes before work is a dictionary". So we have much work ahead of us to take forward the rebuilding of the Economic and Monetary Union. The debate is on-going in many circles. Let's pursue it with vision and open mind.
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