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Road between desert

Roadmap for completing Economic Monetary Union

Roadmap for completing Economic Monetary Union

These include a new fund, new budgetary instruments and the functions of a possible European Minister of Economy and finance. Despite important institutional reforms to strengthen Europe's Economic and Monetary Union (EMU) over recent years, the Commission believes that the EMU architecture remains incomplete. The Roadmap reflects remaining challenges and sets the way forward. Delivering against the `Five Presidents' Report' (2015) and President Juncker's `State of the Union' (2017) address, the Roadmap is aligned with previous papers on the Deepening of the Economic and Monetary Union and the Future of EU Finances.

The Commission has announced four key initiatives:

  1. a proposal to establish a European Monetary Fund (EMF), anchored within the EU's legal framework and built on the well-established structure of the European Stability Mechanism (ESM);
  2. a proposal to integrate the substance of the Treaty on Stability, Coordination and Governance into the Union legal framework, taking into account the appropriate flexibility built into the Stability and Growth Pact and identified by the Commission since January 2015;
  3. a Communication on new budgetary instruments for a stable euro area within the Union framework, which sets out how certain budgetary functions are essential for the euro area and how the EU as a whole can be developed within the framework of the EU's public finances of today and tomorrow. It discusses four specific functions:
    1. support to Member States for structural reforms through a reform delivery tool and technical support;
    2. a dedicated convergence facility for Member States intending to join the Euro;
    3. a backstop for the Banking Union, through the EMF/ESM; and
    4. a stabilisation function in order to protect investments in the event of large asymmetric shocks.
      Associated initiatives are to be presented by the Commission in May 2018, in the context of its post-2020 Multiannual Financial Framework;
  4. a Communication about the key functions of a possible post of a European Minister of Economy and Finance, serving as Vice-President of the Commission and Eurogroup chair. The Commission notes that such a position is possible under the current EU Treaties and is expected to `strengthen the coherence, efficiency, transparency and democratic accountability of economic policy-making for the EU and the euro area'. The Communication outlines the operational setting and a potential timeline for instituting this new position.

Key message

The Commission is seeking to press ahead with the overall aim of enhancing the unity, efficiency and democratic accountability of the EMU by 2025, and to progress its agenda for jobs, growth, investment, social fairness and macro-economic stability. Bolstering the EMU's architecture is viewed as key in overcoming vulnerabilities, reducing disparities, enhancing economic resilience and securing economic growth and stability across Europe.

It is one of ten priorities targeted for completion before conclusion of the current Presidency term, which also include the digital market, sustainable finance, migration policy and democratic change. This would seem an impossible agenda, but persistent geo-political tensions and uncertainties, including Brexit, are creating additional impetus.

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