EU – Baltic States, Financial Services, Funds, Modern EU

The European Commission, together with the European Parliament and the EU member states, is organising a series of 'Future of Europe' debates across the EU member states. The previous two papers suggested broad consensus on the global challenges (see the reflection papers on harnessing globalisation below) and on the social dimension of Europe (a review of reflection paper below). The present reflection paper is on the future of EU finances, which intents to start discussions on the future of economic and monetary union, EMU.  

Reflection paper on EMU

The third one is published on 31 of May 2017. It fixes some options intended to help build a broad consensus on how to take on the challenges ahead and to give a fresh impetus to the important debate on economic and monetary union (EMU). Present reflection paper is an invitation for the member states and civil society to express their views on the EMU’s future as part of the broader debate on the future of Europe.

Discussion would involve taking steps in three EMU’s key areas:

- 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.

- Achieving a more integrated EMU. 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.

- 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 the EMU.  

https://ec.europa.eu/commission/white-paper-future-europe-reflections-and-scenarios-eu27_en

The euro is a success story

This opinion is shared by as many as 340 million Europeans in 19 eurozone states; seven of the states that joined the EU in 2004 have already adopted it. And yet it is only 25 years since the Treaty of Maastricht paved the way for the single currency and only 15 years since the first coin was used. The euro is the second most used currency around the world, it has brought stable prices and has become a part of daily life for most Europeans.

But the tough times the euro area has endured over recent years mean it is not always perceived as such, though today, support for the common currency is back at the highest level since 2004 (at 72 % of euro citizens). The global financial and economic crisis that started in the United States in 2007-08 led to the worst recession in the European Union's six-decade history. The EU states and the EU institutions took strong political decisions to preserve the integrity of the euro and to avoid the worst and these reforms are showing results. But the crisis is not over as long as unemployment remains so high. In order to deliver even better for all citizens, the governance of the euro needs further reform.

Historic review: two previous reflections papers on Europe’s future

The first reflection paper, published on 26 of April 2017 was on the social dimension of Europe. It raised questions on how to sustain “European” standards of living, create more and better jobs, equip people with the right skills and create more unity within our society, in light of tomorrow's society and world of work. The reflection paper has set out three possible options:

- Limiting the social dimension to free movement. Under this option, the EU would keep rules to promote cross-border movements of people in place, such as rules on social security rights of mobile citizens, on posting of workers, on cross-border health care and the recognition of diplomas. However, there would no longer be EU minimum standards on, e.g. health and safety for workers, working and rest time, or maternity and paternity leave, etc. Europe would no longer foster opportunities for EU states to exchange best practices in the fields of education, health, culture and sports, and social and regional reconversion programmes in the EU states that are co-funded by EU money would have to be discontinued or funded nationally.

- Those who want to do more in the social field do more. Countries sharing the euro as a single currency could do more together in the social field to preserve the strength and stability of the euro area and to avoid abrupt adjustments in the living standards of its citizens. Other interested countries could participate as well.

- The EU-27 deepen the social dimension of Europe together. While the centre of gravity for action in the social field should and would remain with national and local authorities, the EU would explore ways to further support Member State action, making full use of all instruments in its toolbox. Legislation would not only set minimum standards but, in selected areas, could fully harmonise citizens' rights across the EU, with the aim of focusing on social convergence in social outcomes.

References:

- Reflection paper on the social dimension of Europe and 

-http://europa.eu/rapid/press-release_IP-17-1454_en.htm?locale=en

Second reflection paper was published on 10 of May 2017; it opened up a debate on how the EU can best harness globalisation and respond to its opportunities and challenges. The following two issues were at stake:

-On the external front, the paper focuses on the need to shape a truly sustainable global order, based on shared rules and a common agenda. The EU has always stood for a strong and effective 'multilateral' global rulebook and should continue to develop it in a way that addresses new challenges and ensures effective enforcement. For example, the EU could push for new rules to create a level-playing field by addressing harmful and unfair behaviour like tax evasion, government subsidies or social dumping. Effective trade defence instruments and a multilateral investment court could also help the EU act decisively against countries or companies that engage in unfair practices.

- On the domestic front, the paper suggested tools to protect and empower citizens through robust social policies and providing the necessary education and training support throughout their lives. Progressive tax policies, investing in innovation and strong welfare policies could all help to redistribute wealth more fairly. Meanwhile, use of EU structural funds to assist vulnerable regions and the EU Globalisation Adjustment Fund to help displaced workers find another job can help mitigate negative impacts.

References: 

- Reflection paper on harnessing globalisation and

- http://europa.eu/rapid/press-release_IP-17-1454_en.htm?locale=en.

More information on the following websites: 

- Reflection Paper on Deepening the Economic and Monetary Union; 

- The Five Presidents' Report; 

-The White Paper on the Future of Europe;

- Reflection paper on the social dimension of Europe;

- Reflection paper on harnessing globalisation.