Wednesday, October 21, 2015
European Commission presents proposals for further reforms of EMU
At least they are trying. Today, the European Commission presented its plans on how to get the monetary union on a more sustainable footing. The Commission released a so-called policy package, trying to bring parts of the “Five Presidents’ Report” into life. To be clear, the Commission aims at implementation by mid-2017. Afterwards, stage 2 should start, which according to the Commission would include “more far-reaching measures”, which will “inevitably involve sharing more sovereignty and solidarity”. Even though the Commission states that its proposals are the result of extensive consultations with Eurozone member states, the European Parliament and stakeholders (whoever this might be), past experience has shown that these proposals are likely to be watered down in the coming months. Looking at the details, the Commission has tried to address all relevant issues, which would make the monetary union more sustainable: increase competitiveness, more supervision of national fiscal policies, a fully-fledged banking union and a common Eurozone voice in international for a. The concrete proposals, however, suggest that the courage to really make a huge step ahead was missing (or probably better said: the room was simply not given by national governments). Concrete, the Commission proposes national Competitiveness Boards, a European Fiscal Board, a more streamlined process for setting up national budgets combined with European supervision, the full implementation of the Bank Recovery and Resolution Directive and the directive on Deposit-guarantee schemes and, last but not least, a common representation of the Eurozone at the IMF. From a negative angle, the Commission proposals are mainly of a cosmetical nature and have a high “old wine in new skins” portion. Only the common representation is new and groundbreaking. Setting up new boards or committees could be regarded as window-dressing and it is doubtful that this really leads to stricter implementation of necessary reforms. The intentions are good but who does still remember the fiscal compact or national debt-brakes? From a positive angle and to give the Commission some credit, however, they at least tried. The Commission’s proposals are a very gentle, probably too gentle, push towards more political union. It is probably already the smallest common denominator across national governments. Let’s face it, the appetite for quantum leaps towards a political union is currently simply not strong enough.