25th October 2015

EC proposes measures to complete EMU

Based on the recent Five Presidents´ Report on the completion of the Economic and Monetary Union, the European Commission last week adopted a first set of measures to strengthen the euro area. The Report proposes actions in two phases, with the aim to have a robust single euro zone with a common treasury by 2025. Stage 1 measures are less controversial, within the existing Treaty framework. Stage 2 will need Treaty change. The Commission last week started adopting Stage 1. It adopted proposals for legal acts altering the European Semester process, with the aim to include more democratic scrutiny and social dialogue. Also, prior to country-by-country dialogues, there will be a single dialogue for the whole of the eurozone. The EC also proposes to establish National Competitiveness Boards in the member states, which would assess national policies with regard to the overall competitiveness. Under the auspices of the EC, there will also be a European Fiscal Board, an independent advisory body of 5 experts to assess eurozone fiscal stance. By the end of the year, the EC will adopt a proposal for a common deposit guarantee scheme for the eurozone. This would complete the banking union, but is controversial, mainly in Germany. The most controversial measure, however, was adopted last week and envisages single external representation of the euro area. According to the Commission, the eurozone is a strong economic actor, but its fragmented voice degrades its position. For example, at the IMF, eurozone states own 19% of the shares, but due to the lack of a single voice, the US with only 17% are able to steer the institution better. The EC proposes gradual adoption of a single euro area external representation by the president of the Eurogroup, gathering of eurozone finance ministers. Next year, the EC also plans to launch a White Book on Stage 2 measures.

For more, click here, here and here.

Members of the American Chamber of Commerce in the Czech Republic