The State of the European Union. The European Parliament faces its most important elections yet

2018: A YEAR OF SLOW PROGRESS IN EUROZONE REFORM 77 the Governing Council in October 2012, three months after the speech, and without unani- mous support. The measures of 2018: a starting point The measure that ended fears that the euro might collapse was approved in an unconven- tional manner. If the architecture of the euro had been complete, the mechanisms to preserve monetary union would have derived from pre- existing structures and procedures. That was why, as economic recovery continued, the mem- ber countries recognized that they needed to agree on thoroughgoing reforms, so that the in- tegrity of the eurozone would not depend on isolated initiatives but would instead be at the centre of the activities of the monetary union. However, the differences identified above with regard both to the diagnosis of the single currency’s existing problems and the vision of the future made it difficult to reach agreement. In this context, the document published by the European Commission in December 2017 repre- sented significant progress, as it set out the path to follow to deepen the eurozone. This was a roadmap, and included elements to bring to- gether the divergent positions of members, and it also provided a standard against which to measure any progress achieved in 2018. According to the Commission, reform of the eurozone needed to operate on several dimen- sions. Firstly, the eurozone needed to make pro- gress towards financial union, consisting of im- provements to both capital market union and banking union. In the Commission’s view, deliv- ering such progress would require, during the course of 2018, the implementation of deci- sions to reduce the risk of financial institutions, such as reducing the volume of non-performing assets and holdings of sovereign debt of the host country. The document also identified the need to implement a Single Resolution Fund, that would operate across the banking union. Furthermore, after adopting the first two pillars of banking union in previous years (the single resolution fund and the single supervisory mechanism), the Commission identified the need to create the final pillar – a European de- posit guarantee fund – in 2018. This fund would be accessed by domestic in- stitutions in the event of liquidity problems. Its creation is fundamental to the completion of banking union and to ensuring that concerns about the solvency of individual institutions would not affect the host country, as the institu- tion could have direct recourse to the European fund, without compromising the resources of the state where it was based. However, because this meant that risk would be shared more even- ly between financial institutions, some argued that the risk profiles of these institutions should be significantly reduced before the measure it- self was implemented. Secondly, the Commission proposed that substantial progress towards economic and fis- cal union be made in 2018. This would require the creation of European instruments to support structural reforms. In addition, the ground should be prepared for the adoption of meas- ures such as the creation of a fund to support convergence between Member states and the creation of European fiscal capacity in mid- 2019, with the aim of providing stability in the face of shocks affecting individual countries. And there would also be a fund to facilitate the implementation of structural reforms by euro- zone members. Taken together, these measures would entail creating an embryonic fiscal union. Finally, the Commission proposed the discus- sion of institutional reforms in a number of areas