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PROPOSALS AND PROSPECTS FOR THE REFORM AND COMPLETION OF EUROPEAN MONETARY UNION
95
Finally, the Commission proposed that, with
effect from the next legislature, the eurozone
commissioner should also be president of the
Eurogroup. This super-commissioner would fill
three institutional roles: being in charge of the
EMF, the eurozone budget and budgetary coor-
dination of Member States; assuming overall
responsibility for the common economic policy
of the eurozone; and being accountable to the
European Parliament.
The number of documents and legislative
proposals that have accompanied the route
map make this the most detailed initiative yet
presented by the Commission with respect to
EMU. These proposals are undoubtedly a step in
the right direction and reflect a growing level of
consensus regarding the need to make changes
at the level of institutional structure, even if
some of the proposals are inadequate while
others are too vague to represent real progress.
In summary, the proposals contained in this pac-
kage are not sufficient to get to the root of the
problem: the lack of greater political union.
In the Commission’s view, none of these pro-
posals require Treaty reform, and instead the
Commission argues that they could be imple-
mented under the “flexibility clause” in the
Treaty of the EU, which makes it possible to
adopt certain decisions to achieve the objectives
established in the Treaties, by unanimous agree-
ment of the European Council, at the proposal
of the European Commission, subject to the
consent of the European Parliament.
The creation of the EMF, along with the pro-
posed Minister of Economy and Finance, is one
of the main institutional innovations of this pro-
cess. For the European Commission, the new
European Monetary Fund would replace the cu-
rrent ESM, to rescue countries in difficulty, but
with strict conditions attached to any support.
The most important development is that this
Fund would constitute part of the
acquis com-
munautaire
, something which in itself repre-
sents a huge step. Moreover, the new EMF
would provide a backstop for the Single
Resolution Mechanism and act as a lender of
last resort to ensure the orderly dissolution of
failed banks. The Commission also intends to
speed up decision-making in emergencies, and
to deliver more direct intervention in the mana-
gement of financial support programmes. Over
time, the EMF may also develop new financial
instruments, such as supporting a stabilization
function to cope with possible external shocks.
The European Commission proposals were
debated at a euro summit in Sweden in
December 2017, but the political stalemate in
Germany meant that no major decisions could
be taken. Given the impossibility of making
substantive progress, the only decision taken
was to seek to focus efforts during the first half
of 2018 on the areas of closest agreement, spe-
cifically:
– Approve and implement a financial backstop
for the Single Resolution Mechanism (SRM),
possibly in the form of a credit line from the
European Stability Mechanism (ESM).
– Continue to make progress towards desig-
ning the functions of the ESM, potentially for
conversion to a European Monetary Fund, as
proposed by the European Commission.
– Continue to develop banking union, inclu-
ding gradual introduction of a European
Deposit Guarantee System, currently on hold
waiting for decisions to be taken about the
final design.
Although there are still a number of issues to
be addressed with regard to completion of the
eurozone, if significant progress is made in the
three areas identified above, this in itself would
represent significant progress towards stabili-
zing and strengthening Monetary Union.