Communication from the Commission – A blueprint for a deep and genuine economic and monetary union: launching a European debate

The creation of the Economic and Monetary Union (EMU) and the introduction of the euro were milestones of European integration. They stand out among the EU's most far-reaching achievements and the euro is one of Europe's defining symbols at home and across the globe. The founders of the EMU pursued great aspirations with the single currency, both economic and political. Some of these aspirations have already been realised, while others remain to be achieved.

EMU is unique among modern monetary unions in that it combines a centralised monetary policy with decentralised responsibility for most economic policies, albeit subject to constraints as regards national budgetary policies. Unlike other monetary unions, there is no centralised fiscal policy function and no centralised fiscal capacity (federal budget).

It has been clear since the inception of the euro that the increased interdependence of its Member States meant that sound budgetary and economic policies were of particular importance. The Stability and Growth Pact (SGP) set down the rules governing the coordination of budgetary policies. It also foresaw action to be taken against Member States that did not comply with the rules. It was thought that this coordination would be sufficient to ensure sound policies at national level.

By the time of the eruption of the financial crisis in 2008 some euro area Member States had accumulated large private and public debts, losses in competitiveness, and macroeconomic imbalances. This rendered them particularly vulnerable when the crisis struck, with considerable contagion effects across the euro area once it turned into a sovereign debt crisis. The build-up of these vulnerabilities was partly due to an insufficient observance of and respect for the agreed rules underpinning EMU as laid down in the SGP. In good part these vulnerabilities stemmed from features of the original institutional setup of EMU, in particular the lack of a tool to address systematically macroeconomic imbalances.

Already in 2008, the Commission's EMU@10 report presented a range of possible changes to this setup. The crisis accelerated the need for change. While the EU has taken decisive action to address the major challenges, EMU needs to be deepened further. This Blueprint for a Deep and Genuine EMU describes the necessary elements and the steps towards a full banking, economic, fiscal and political union.

• Primary Source

EUR-Lex: COM(2012)777: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:777:FIN

ESO: Background information: Barroso unveils euro survival plan http://www.europeansources.info/record/barroso-unveils-euro-survival-plan/

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