How Effective are the European Commission's Proposals for Deepening Economic and Monetary Union?

Drawing on the experience of the euro area debt crisis, the European Commission has submitted to the European Council a set of proposals for a deepening of Economic and Monetary Union. The proposals include the transformation of the ESM into a European Monetary Fund and new financial instruments to support structural reform in the member countries and economic stabilisation in the event of external shocks. As "European Finance Minister", the Commissioner for Economic and Financial Affairs shall in future also take over the presidency of the Ecofin Council. The Commission thereby wants to gain greater influence on economic policies at the national level. The proposals are, however, unlikely to solve the basic problem, i.e., that many member countries fail to sufficiently align policy in their own area of competence to the rules and requirements of a monetary union. In political terms, the proposals imply a shift of responsibilities towards the European institutions, further steps towards a transfer union and the pooling of risks and liabilities. Consensus between member countries on these issues will be difficult to achieve, as witnessed by the reception of the proposals so far. More constructive and forward-looking would be for the European Council to agree on a "manifesto" reinstating the original regulatory principles of national responsibility governing EMU and to ensure that these principles be firmly enshrined in the member countries' fundamental legislation.