Editor's note

Commission’s plan for deepening the Economic and Monetary Union (EMU) has noble aims: more jobs, growth, investment, social fairness and macroeconomic stability in the member states. The single currency offers protection and opportunities to Europeans; strong and stable euro area is essential both for its members and for the whole EU.

The growth in the EU is apparent: unemployment is at its lowest level since 2008, economic sentiment is at its highest since 2000, Europeans has shown the highest level of support for the single currency since the introduction of euro more than two decades ago. This provides a window of opportunity for deepening Europe's Economic and Monetary Union.

The new measures are a continuation of Union’s previous measures. There have been important institutional reforms to strengthen EMU during 2015-17: proposals in the Five Presidents' Report of June 2015; Reflection Papers on the Deepening of the Economic and Monetary Union, and the state-of-art of the Future of EU Finances made in spring 2017, to name a few. However, the final architecture needs completion and “final touch”: hence present roadmap reflecting changes and eradicating challenges.

Commenting on the roadmap, Commission President Juncker said that present robust economic growth after years of crises, encourages the EU member states to move ahead to ensure that the Union’s economic and monetary policy becomes more united, efficient and democratic, “working for all citizens”. There is no better time to fix the roof than when the sun is shining, he added. See: http://europa.eu/rapid/press-release_IP-17-5005_en.htm?locale=en

Roadmap’s four main initiatives

All reforms to combine solidarity and responsibility initiated so far by the EU were not enough; to increase states’ economic performance and citizens’ confidence in the single currency, new measures are needed. For example, according to recent European Flash Eurobarometer on the euro area, only about 64% of respondents say the euro is a good thing for their countries. Thus, the following four main initiatives at the EU and member states’ level are suggested:

1. Establishing European Monetary Fund (EMF), connected with already functioning European Stability Mechanism (ESM); the latter played a decisive role in safeguarding the euro’s stability by assisting the states to regain or maintain access to sovereign bond markets. The EMF will preserve current financial and institutional structures, including the role of national parliaments, and thus continue to assist euro area states in financial distress. In addition, the EMF would support the Single Resolution Fund and act as a last resort lender in order to facilitate the orderly resolution of distressed banks. More rapid decision-making in cases of urgency and more direct involvement in the management of financial assistance programmes are also foreseen. Over time, the EMF could also develop new financial instruments, for instance to support a possible stabilisation function. The European Parliament and the Council are expected to adopt this proposal by mid-2019.

2. Integrating Treaty on Stability, Coordination and Governance (TSCG) into the Union’s basic law, taking into account flexibility envisaged in the Stability and Growth Pact. Already in 2012, the 25 signatory EU states committed to incorporate TSCG into the Union’s law by the beginning of January 2018. This proposal makes TSCG the main elements of the EU basic Treaty in order to support sound fiscal frameworks at national level, which is fully in line with existing rules defined in the EU’s primary and secondary legislation. The European Parliament and the Council are invited to adopt this proposal by mid-2019.

3. Creating new budgetary instruments for stable euro area; they include some budgetary functions essential to strengthen member states public finances presently. These measures also include specific EU functions:

a) supporting states in structural reforms through a reform delivery tool and technical support at the request of the states;

b) providing a dedicated convergence facility for other EU states to join euro;

c) assisting in supporting the Banking Union, through the EMF/ESM, to be agreed by mid-2018 and made operational by 2019; and

d) creating a stabilisation function in order to protect investments in the event of large asymmetric shocks.

The Commission will make necessary draft proposals in May 2018 for the post-2020 Multiannual Financial Framework. The European Parliament and the Council are invited to adopt these proposals by mid-2019. Besides, the Commission during 2018-20, will propose measures for strengthening the Structural Reform Support Programme, by doubling the member states’ funding for technical support activities, reaching €300 million up to 2020. The Commission is also proposing to test the new reform delivery tool in a pilot phase with some targeted changes to the Common Provisions Regulation governing the European Structural and Investment Funds (ESIF) in order to extend the possibilities to use part of their performance reserve in support necessary reforms. The European Parliament and the Council are invited to adopt these latter two proposals during 2018.

4. Suggesting new competences in a possible European Minister of Economy and Finance (who could serve as Vice-President of the Commission and chair the Eurogroup), as is possible under the current EU Treaties. The new “minister” would combine existing responsibilities and expertise while strengthening the coherence, efficiency, transparency and democratic accountability of economic policy-making for the EU and the euro area, though in full respect of national competences. Reaching a common understanding on the role of the Minister by mid-2019 would allow setting it up as part of the formation of the next Commission. The Eurogroup could then also decide to elect the Minister as its President for two consecutive terms in order to align both mandates.

At the Euro Summit on 15 December 2017, the EU leaders will discuss next steps, with a view to reach concrete decisions at a special meeting planned for the end of June 2018. Mário Centeno, a Harvard-trained economist, who has been Portugal’s finance minister since 2015, was elected as a new next president of the Eurogroup.

References: Commission press release “Commission sets out roadmap for deepening Europe's Economic and Monetary Union”, Brussels, 6 December 2017. In: