REPORT on the EMU@10: The first ten years of Economic and Monetary Union and future challenges

    28.10.2008 - (2008/2156(INI))

    Committee on Economic and Monetary Affairs
    Rapporteurs: Pervenche Berès, Werner Langen

    Procedure : 2008/2156(INI)
    Document stages in plenary
    Document selected :  


    on the EMU@10: The first ten years of Economic and Monetary Union and future challenges


    The European Parliament,

    –   having regard to the Commission Communication of 7 May 2008 on EMU@10: successes and challenges after 10 years of Economic and Monetary Union (COM(2008)0238) (Communication on EMU@10),

    –   having regard to the Commission Communication of 24 June 2008 on Public Finances in EMU 2008 (COM(2008)0387),

    –   having regard to its resolution of 14 November 2006 on the 2006 Annual Report on the euro area[1],

    –   having regard to its resolution of 12 July 2007 on the 2007 Annual Report on the eurozone[2],

    –   having regard to its resolution of 20 February 2008 on the input for the 2008 Spring Council as regards the Lisbon Strategy[3],

    –   having regard to its resolution of 15 November 2007 on the European interest: succeeding in the age of globalisation[4],

    –   having regard to its resolution of 15 February 2007 on the Situation of the European economy: preparatory report on the broad economic policy guidelines for 2007[5],

    –   having regard to its resolution of 22 February 2005 on Public Finances in EMU - 2004[6],

    –   having regard to its resolution of 26 April 2007 on Public Finances in the EMU 2006[7],

    –   having regard to its resolution of 9 July 2008 on the ECB annual report for 2007[8],

    –   having regard to its resolution of 1 June 2006 on the enlargement of the euro zone[9],

    –   having regard to its resolution of 20 June 2007 on improving the method for consulting Parliament in procedures relating to the enlargement of the euro area[10],

    –   having regard to its legislative resolution of 17 June 2008 on the proposal for a Council decision in accordance with Article 122(2) of the Treaty on the adoption by Slovakia of the single currency on 1 January 2009[11],

    –   having regard to its resolution of 14 March 2006 on the strategic review of the International Monetary Fund[12],

    –   having regard to its resolution of 5 July 2005 on the implementation of an information and communication strategy on the euro and economic and monetary union[13],

    –   having regard to its resolution of 23 September 2008 with recommendations to the Commission on hedge funds and private equity[14],

    –   having regard to the resolution of the European Council of 13 December 1997 on economic policy coordination in stage III of EMU and on the Treaty Articles 109 and 109b of the EC Treaty,

    –   having regard to the contribution by the Council (Economic and Financial Affairs) of 12 February 2008 to the Spring European Council conclusions,

    –   having regard to the Council Conclusions of 7 October 2008 on a coordinated EU response to the economic slowdown,

    –   having regard to the Memorandum of Understanding of 1 June 2008 on Cooperation Between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on Cross-Border Financial Stability,

    –   having regard to Rule 45 of its Rules of Procedure,

    –   having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of the Committee on International Trade (A6‑0420/2008),

    A. whereas on 1 January 1999 eleven Members States - Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland - adopted the European Union's single currency,

    B.  whereas four other Member States have joined the euro area since its inception: Greece in 2001, Slovenia in 2007, and Cyprus and Malta in 2008,

    C. whereas the euro area is set to expand further as most Member States currently outside the euro area are preparing to join at some point in the future and whereas Slovakia will join the euro area on 1 January 2009,

    D. whereas the economic and monetary union (EMU) has been a success in many ways, with the single currency enhancing economic stability in the Member States,

    E.  whereas euro area membership implies a high degree of economic interdependence between the Member States involved and therefore requires closer coordination of economic policies and the playing of an effective role in global economic and financial governance in order to reap the full benefit of the single currency and to face future challenges, such as increased competition for natural resources, global economic imbalances, the growing economic importance of emerging markets, climate change and the population ageing in Europe,

    F.  whereas the average inflation during the first ten years of the euro area was broadly in line with the European Central Bank (ECB) objective of price stability of close to, but below, 2 %; whereas inflation has recently risen well above that level due to global structural changes, in particular regarding the increases in energy and food prices, loosening of monetary policy in the United States of America, as well as the lack of vigilance by a number of third country central banks,

    G. whereas the rapidly growing demand for scarce energy and other commodities by emerging economies has progressively pushed supply up to capacity limits; and whereas the upward pressure on price has been exacerbated by the fact that commodities are increasingly considered to be financial assets, to the extent that they can be used as a store of value,

    H. whereas the openness of the euro area is welcomed and the current rising value of the euro is considered to have possible negative effects, namely as regards affecting exports and encouraging imports into the internal market, as well as positive effects in helping the EU economy face the dramatic oil price rise, I.  whereas the global economic environment has been favourable to job creation during the first ten years of the euro, leading to the creation of nearly 16 million jobs - disregarding the quality of the jobs created - and a fall of the rate of unemployment from 9 % in 1999 to an estimated 7,3 % in 2008,

    J.   whereas economic and productivity growth have been disappointing, with growth in output per worker halving from 1,5 % during the period 1989 to 1998 to an estimated 0,75 % during the period 1999 to 2008,

    K. whereas the euro has rapidly emerged as the second most important international currency alongside the US dollar and whereas the euro plays an important role as a reference currency for many countries worldwide; whereas, however, the potential of the euro is insufficiently exploited at a global level because the euro area has neither a properly defined international strategy nor effective international representation,

    The first ten years of the euro

    1.  Shares the view that the single currency has become a symbol of Europe and has shown that Europe is capable of taking far-reaching decisions for a common and prosperous future;

    2.  Welcomes the fact that the euro has brought stability and fostered economic integration in the euro area; welcomes the stabilising effects of the euro on the world currency markets especially in times of crisis; notes that internal economic divergences have not yet diminished as expected and productivity has not developed satisfactorily in all parts of the euro area;

    3.  Notes with satisfaction that the creation of other monetary unions are being considered in other parts of the world;

    4.  Points to the vital link between monetary policy and trade policy at global level, which is demonstrated in countless studies, and stresses in this connection the positive role played by exchange rate stability in ensuring the sustainable growth of international trade;

    5.  Points out that the increasing use of the euro as an international trading currency is benefiting the Member States in the euro area in particular, since it reduces the exchange rate risk for their undertakings and hence the cost of international trade;

    6.  Recalls that during the first ten years of the EMU, Parliament has played an active role, in both economic and monetary areas, and has done as much as possible to ensure more transparency and democratic accountability;

    7.  Underlines that more needs to be done to reap the full benefits of the EMU, such as enabling Member States and regions with below‑average GDP to catch up, and strengthening citizens' understanding of and commitment to the single currency;

    8.  Proposes the following elements and concrete measures for a desirable EMU roadmap:

    Economic divergence, structural reforms and public finances

    9.  Believes that streamlined and more coherent, multi-supportive economic reforms coordinated in a timely fashion on the basis of the integrated guidelines for growth and jobs (Integrated Guidelines) and a policy-mix approach of the Lisbon Strategy could decrease economic divergences; stresses the need to improve and simplify the procedures and methodologies for revision and assessment of the implementation of those guidelines at the end of each year;

    10. Recognises that in the case of modernising efforts and economic performance, the countries that are most successful are those that combine forward-looking and well-balanced structural reforms with higher-than-average investment in research, development and innovation, education, lifelong learning and child-care, and the renewal of reliable social networks; notes that, for the most part, the same Member States have a highly efficient and transparent administration, with budget surpluses, lower than average debt rates, and high-quality, effective and targeted public spending, while showing signs of a contribution by technical progress to the national growth result that is almost twice the size of the EU average; notes, furthermore, that those ‘benchmark’ Member States are, as a result of their high employment rates, including the employment of women and older workers, and their particularly high birth rates, those that are best prepared for an ageing society and for guaranteeing a high level of competitiveness;

    11. Stresses the need for mutual reinforcement of stability and growth-oriented macro-economic policies by making balanced policy and investment a matter of common concern: the need to follow closely public balances through the efficient management of tax policy and expenditure and their impact on the demand side and, in parallel, agree on creating a favourable environment for cross-border operations by undertakings;

    12. Notes that the revised Stability and Growth Pact (SGP) has proven its value and that a strong consolidation of budgets has to be adhered to, as demographic change and possible decline in economic growth could lead to budgetary problems in euro area Member States, which could have negative effects on the stability of the euro area as a whole; criticises, in this context, the lack of discipline in combating budgetary deficits in times of economic growth and stresses that Member States must more effectively work towards an anti-cyclical fiscal policy, in particular in order to be better prepared for external shocks; underlines, therefore, the need for a short-term strategy to reduce national debts and a sustainable and sound growth strategy, which will allow for a reduction of national debt to a maximum of 60 % in the long term;

    13. Notes that the main elements of the SGP must also be consistently adhered to in the future, because the thresholds of 3 % government deficit and 60 % government debt to gross domestic product were specified on the basis of the economic conditions of the 1990s; is of the opinion that the SGP must be adhered to strictly by the Member States and supervised by the Commission; is of the opinion that both debt targets should be treated as ceilings to be avoided; notes that an effective coordination of economic and financial policy is a precondition for the economic success of the EMU, although such coordination should respect the principle of subsidiarity; calls on the Commission to examine all possible ways in which the preventive arm of the SGP could be strengthened; stresses that existing supervisory instruments must be used better by the Commission and that the medium-term examination of national budgets by the Eurogroup must be strengthened;

    14. Considers that a sustainable and stable macro-economic environment requires improving the quality of public finances including further budgetary consolidation, high efficiency of public spending and enhanced investment in education, human capital, R&D and infrastructure that is conductive to growth and could stimulate employment and which address major society concerns, such as climate change, in line with the objectives of the climate-energy package;

    15. Takes the view that structural reforms should focus on increasing productivity through a better combination of economic and social policy, while ensuring a good level of social dialogue as defined in the Lisbon Strategy;

    16. Notes that competition policy should be complementary to structural policies and advocates support for the restructuring of the economy;

    17. Warns against focusing essentially on wage moderation as a way of achieving price stability; recalls, in this context, that increased competition resulting from globalisation has already led to downward pressure on wages, while the imported inflation triggered by the increase of the price of oil and other commodities has already caused a loss of consumer purchasing power; reiterates its conviction, once again, that this issue should, in particular, be addressed by means of a fairer distribution of wealth;

    18. Considers wage and tax policy to be efficient tools both for economic stabilisation and growth; is of the view that real wage increases in line with productivity levels should be ensured and that coordination of tax policy should be selectively used to achieve economic goals; considers that the fight against tax fraud, as regards both direct and indirect taxes, is particularly important and that that fight should be stepped up; underlines the urgent need to strengthen a culture of encouragement and involvement as part of the concepts of corporate governance and corporate social responsibility;

    19. Stresses the need for fair rules for the internal market; considers, therefore, that the race to the lowest corporate tax rates is counter-productive;

    20. Requests that Member States in the euro area strengthen the effective coordination of economic and financial policy, in particular by developing a coherent common strategy within the Eurogroup; points out that such a coherent common strategy should include the coordination of the schedule for the budgetary procedure and draft budgets on the basis of common assumptions on economic developments, the future exchange rate between the euro and the US dollar and the potential development of energy prices; supports the proposal of the Commission to demand medium-term framework programmes from Member States for their economic and financial policies and to control their implementation; underlines that every Member State must take responsibility for tackling structural reforms and improving its competitiveness in a cooperative manner so that trust in and acceptance of the euro is maintained;

    21. Notes that different patterns on structural reforms and degrees of openness have contributed to the diverging performances of euro area Member States; supports the conclusions in Commission Communication on EMU@10 as regards the insufficient catching up by several euro area economies and the increasing divergences between euro area Member States; calls for regularl exchanges of views and cooperation within the Eurogroup with a view to achieving the common goal of accelerating the convergence process;

    22. Requests that the Commission handle, in a uniform manner, the common criteria in assessing economic and fiscal data; refers to the responsibility of the Commission and the Member States regarding the reliability of the statistical data, and demands that future decisions be taken only if there is no doubt regarding the validity and accuracy of the available data; requests also that the option of launching investigations if there is a discrepancy over a number of years between the projected data of the stability and convergence programmes and the data which can realistically be expected;

    Monetary policy

    23. Recalls its strong commitment to the independence of the ECB;

    24. Notes that the regular reports of the ECB to Parliament, in particular to its Committee on Economic and Monetary Affairs, contribute to the transparency of monetary policy and welcomes the possibility for Members of the European Parliament to put written questions to the ECB on monetary policy, thus improving the accountability of the ECB vis-à-vis the citizens of the Union; supports the demand for a stronger public debate on the future common monetary and currency policies in the euro area;

    25. Considers that the monetary policy dialogue between Parliament and the ECB has been a success, and one which should be built on further; expects an improvement of the monetary dialogue on several points, such as coordinating the dates for the regular hearings of the ECB President with the ECB’s calendar for monetary policy decisions so as to improve the analysis of the decisions, whilst still having the possibility to invite the President of the ECB to discuss topical issues when necessary;

    26. Notes that the primary objective of the ECB’s monetary policy is to maintain price stability, and that the ECB aims at inflation rates of below, but close to, 2 % over the medium term; points out that the objective of price stability can be achieved effectively only if the root causes of inflation are properly addressed; recalls that Article 105 of the EC Treaty also assigns to the ECB the task of supporting the general economic policies of the Community;

    27. Is of the opinion that the ECB should move towards a direct inflation targeting regime where a point inflation target is supplemented by a range of permitted fluctuations around the target rate; invites the ECB to publish its inflation forecasts; such a move toward a direct inflation targeting regime should not preclude focusing on the dynamics of monetary aggregates in order to avoid new asset bubbles;

    28. Considers that inflation is a global reality and that in an open economy it cannot be combated by EU monetary policy alone;

    29. Stresses its willingness to explore possible improvements in the procedure for appointing the members of the ECB's executive board before 2010; regards it as important that academic and/or professional experience and a variety of backgrounds in the economic, monetary and financial sector be represented among executive board members; draws attention to its calls for an ECB executive board of nine members, thus replacing the system existing now and avoiding the even more complex solution decided upon for the future; urges that a corresponding change to the Treaty be adopted;

    30. Stresses the need for a strengthened international monetary dialogue between the ECB and other main central banks and institutions, and, in particular, with the US Federal Reserve, the Bank of Japan, and the People's Bank of China;

    Integration and supervision of financial markets

    31. Believes that financial integration should mean more economic growth and competitiveness in addition to more stability and liquidity in the internal market;

    32. Notes that the main financial centre in the EU is outside the euro area; nevertheless recalls that EC legislation covers all Member States and market players active in the internal market; believes that the EU urgently needs to enhance its supervision structure taking into account the specific role of the ECB;

    33. Is of the view that much remains to be done in the area of the clearing and settlement of cross-border securities transactions, where no real integration exists to date;

    34.  Underlines that, with regard to retail services, more integration is needed, without such integration being to the detriment of consumer protection; believes that customer mobility, financial literacy, access to basic services, and comparability of products need to be improved;

    35. Considers a Europeanisation of the financial supervision structure, financial market transparency, effective competition rules and appropriate regulation to be necessary in the medium term, in order to improve crisis management and cooperation between the European System of Central Banks (ESCB), supervisory authorities, governments and market participants; takes the view that an integrated, comprehensive (covering all financial sectors), consistent and coherent supervisory framework starting with a balanced approach in regulating the cross-border spread of financial risk on the basis of harmonised legislation would decrease compliance costs in the case of multi-jurisdiction activities; notes that 'gold plating' (regulating beyond the minimum requirements of EC legislation) as well as regulatory arbitrage should be avoided; calls on the Commission to put forward proposals for revising the existing supervisory architecture along those principles; is of the opinion that any role for the ECB in terms of supervision should be extended beyond the borders of the euro area, via the ESCB;

    36. Welcomes the Memorandum of Understanding on Cooperation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on Cross-Border Financial Stability agreed in spring 2008; underlines, however, that that Memorandum of Understanding is soft law only and relies upon Member States’ willingness to cooperate with each other; is of the opinion that even if rules on burden sharing are very difficult to define ex ante, the work relating to crisis management needs to continue;

    37. Highlights that the European Union, as the world's largest economic area with the largest financial markets, should play a leading role at international level in terms of reforming the regulatory system for financial services for the benefit of all countries involved and overall stability; considers that financial stability should become a fundamental goal of policy making in a world of increasingly integrated financial markets and financial innovation, which may sometimes have destabilising effects on the real economy and bear systemic risks; is convinced that any ambitious decisions adopted at EU level will encourage other countries to follow, and, in this respect, highlights the responsibility for also tackling global or 'off-shore' problems; takes the view that the political accountability of the international regulatory bodies needs to be addressed in parallel with such regulatory work;

    38. Requests that the Commission examine the creation of European bonds and develop a long-term strategy which enables the issuing of such bonds within the euro area, in addition to Member States' national bonds; refers to the need for an appraisal of its consequences for both international financial markets and the EMU;

    Enlargement of the euro area

    39. Requests that all Member States outside the euro area observe the Maastricht criteria and the reformed and generally flexible SGP; considers that a strict interpretation of the SGP and the use of the exclusion criteria before any possible accession must be ensured by the Commission; notes that equal treatment of the Member States in the euro area and Member States wishing to join must be ensured; notes, in this context, that the long-term stability of the euro area must be regarded as an aim of common interest and that enlargement and stability must go hand in hand; deems it essential for Member States in the euro area and those with a special status strictly fulfil their obligations and leave no doubt about the common aims of price stability, independence of the ECB, budget discipline or their fostering of growth, employment and competitiveness;

    40. Considers that the Member States outside the euro area that fulfil the Maastricht criteria and have no derogation in the Treaty should adopt the common currency at the earliest possible opportunity;

    41. Stresses that membership of the euro area requires full adherence to the Maastricht criteria, as specified in the Treaty and the Protocol to Article 121 of the Treaty, namely: a high degree of measured price stability, as well as the sustainability of such price stability, public finances without excessive deficit, membership of ERM II for at least two years, observation of the normal fluctuation margins, adjustment of long-term interest rates, compatibility of the legal rules with the provisions of the Maastricht Treaty relating to the EMU, and an independent central bank;

    42. Is of the opinion that one of the most challenging aspects of joining the euro area is to ensure the sustainability of the Maastricht criteria; underlines, however, that, at the same time, the Maastricht criteria are also a first step on the way to keeping reform processes on track, including further commitments and efforts regarding structural reforms, investment and economic coordination;

    43. Welcomes the stronger and efficient supervision of Member States participating in ERM II and wishing to join the euro area , as well as their economic development; notes that successful participation in the ERM II must remain a real precondition and not only a secondary requirement for membership of the euro area; the same accession requirements must be applied to all Member States joining euro area;

    44. Regards an enduring and successful expansion of the euro area as a major challenge for the coming years and that both the ECB's institutional standards and its decision-making process have to be adapted to this change and the rotation model has to take into account the economic weight of individual Member States;

    45. Stresses, in connection with enlargement of the euro area, the desirability of a high level of convergence in the real economy in order to limit the strain involved, both for the euro area and the Member States wishing to join; considers, in this context, that facilities in favour of those Member States participating in the euro area, where the single monetary policy may have a particularly contractive effect, should be established;


    46. Emphasises that while in the euro area to date a high degree of price stability has been maintained, 'perceived inflation' has substantially diverged from the lower actual inflation rates in the Member States during the last ten years; demands, therefore, better information and clarification of facts for the population about the need for and operation of the EMU, in particular with regard to price stability, international financial markets, and the advantages of stability within the euro area in international financial crises;

    47. Considers that the single currency remains a communication priority for the European Union; believes that the benefits of the euro and of the EMU - price stability, low interest rates on mortgages, easier travel, protection against exchange-rate fluctuations and external shocks - must continue to be presented and explained to the public in detail; believes that particular emphasis should be placed on keeping citizens of the Union, consumers and small and medium-sized enterprises (SMEs), who do not have sufficient capacity to adjust immediately to new developments and challenges for the euro, informed and updating them on developments;

    48. Calls on the ECB, in its annual report or in a special report, to undertake an annual quantitative analysis of the benefits that the euro has brought to ordinary citizens, with concrete examples of the manner in which the use of the euro has had positive effects on people’s daily lives;

    49. Considers that communication is of utmost importance in preparing the introduction of the euro in the Member States planning to join the euro area; notes that communication on the enlargement of the euro area is also important for all Member States in the euro area;

    50. Considers that the Commission must concentrate its efforts on helping the new Member States to prepare their citizens for the adoption of the euro by undertaking an intensive information campaign, supervising its implementation where such a campaign is already underway and reporting regularly on best practises on the implementation of the National Action Plans for the adoption of the euro; considers also that best practices and know-how acquired from the previous changeovers is likely to be useful for the changeover of the new Member States and for the forthcoming enlargement and preparation of the new applicant countries;

    International role of the euro and external representation

    51. Welcomes the quick development of the euro as the second most important reserve and transaction currency after the US dollar, with a share of 25 % of global foreign exchange reserves; notes that particularly in the countries neighbouring the euro area, the euro plays an important role as a financing currency and that those countries' respective exchange rates are aligned to the euro; approves expressly the ECB's opinion that the introduction of the euro is the last step towards a structured convergence process within the European Union, and that thus the introduction of the euro is possible only under the EC Treaty;

    52. Takes the view that the EMU policy agenda for the next decade will be marked, inter alia, by the challenges presented by emerging Asian economies; regrets that in spite of the growing global role of the euro, attempts to improve the external representation of the euro area on financial and monetary matters have not made much progress; stresses that the euro area must build an international strategy commensurate with the international status of its currency;

    53. Recalls that the most effective way for the euro area to align its influence with its economic weight is by developing common positions and consolidating its representation, ultimately obtaining a single seat in the relevant international financial institutions and forums; urges the euro area Member States, inter alia to speak with a single voice on exchange rate policies;

    54. Stresses that the euro is being used as a national currency outside the euro area; considers that the implications of such use need to be analysed;

    55. Points out that the important role of the euro in international financial markets brings with it obligations, and that the effects of monetary as well as growth policy in the euro area have a global impact; emphasises the increased importance of the euro for international trade and services as a stabiliser in the global environment, as an engine for financial market integration and as a basis for increasing direct investments and cross-border company mergers, as transaction costs could be substantially reduced; calls for a study on global imbalances and the role of the euro and possible adjustment scenarios to prepare Europe better for tackling major external shocks;

    56. Suggests stronger forward-looking cooperation and an enhanced international dialogue between the responsible authorities of the most important currency blocks, to improve the management of international crises, and help to tackle the consequences of currency movements on the real economy; recalls the common successful crisis management at the beginning of the recent US 'sub-prime credit crisis' as well as the crisis in the immediate aftermath of the events of 11 September 2001, which helped to prevent an instant meltdown of the US dollar;

    57. Supports the intention of the Commission to strengthen the influence of the EMU in international financial institutions with a common EU position represented by selected representatives, such as the president of the Eurogroup, the Commission and the president of the ECB; notes that in practice they are already permitted to participate as observers in the most important international financial institutions; demands, however, a better coordination of European positions in order for the common European monetary policy to be represented by its legitimate representatives in future; expects that a euro area position on the exchange rate policies of its main partners can be expressed; calls on the president of the Eurogroup to represent the euro area at the Financial Stability Forum (FSF); suggests that the statutes of the International Monetary Fund (IMF) be amended to allow the representation of economic blocks and organisations;

    58. Highlights that a common EU approach is needed regarding the reform of international financial institutions, which should take into account the challenges of a global economy including the emergence of new economic powers;

    59. Regrets that the Commission has not conducted a more detailed and precise analysis of the euro's international role in its Communication on EMU@10; calls on the Commission to produce a detailed report on the external dimension of the common monetary policy and on its repercussions for the euro area's economic and trading performance;

    60. Stresses that the monetary policies pursued by some of the European Union's partners are designed to under-value their currency, something which has an unfair impact on trade and could be seen as a non-tariff barrier to international trade;

    EMU economic instruments and governance

    61. Considers that all relevant parties - Parliament, the Council, the Commission, the Eurogroup, and the social partners at EU and national level - should work together to strengthen future working of the EMU as regards economic governance on the basis of the following suggestions:

    (a) as an essential component of the Lisbon Strategy and the central economic instrument, the Integrated Guidelines should, with the aim of a balanced ‘policy-mix approach’, pursue mutually inspiring reforms in the areas of employment, the environment and social security;

    (b) the Integrated Guidelines should establish a broad framework for closer economic policy coordination in order to align National Reform Programmes (NRPs), taking into account, however, economic diversity and differing national traditions; a consultation of national parliaments regarding the stability and convergence programmes and the NRPs should be established;

    (c) a stronger link between the Integrated Guidelines, in particularly the Broad Economic Policy Guidelines (BEPG), and the stability and convergence programmes, should be established; the stability and convergence programmes and the NRPs could be presented at the same time (annually at the beginning of autumn) after a debate in the national parliament; the BEPGs could include common budgetary objectives in line with the preventive arm of the SGP;

    (d) Member States' governments should, when deciding on their national budgets, take into account the Integrated Guidelines and the country-specific recommendations as well as the overall budgetary situation in the euro area; the different national fiscal calendars and the main assumptions used in the underlying forecasts should be harmonised in order to avoid disparities caused by the use of different macro-economic forecasts (global growth, EU growth, price of oil barrel, interest rates) and other parameters;

    (e) more formal recommendations for the euro area Member States, such as setting targets regarding medium-term expenditure, specific structural reforms, investments, quality of public finance, should be used whenever possible; a more standardised reporting structure in the context of the NRPs should also be pursued, without hampering national reform priorities; all commitments, targets and benchmarks should be fully incorporated in the Integrated Guidelines and the NRPs in order to improve the coherence and efficiency of economic governance;

    (f) A long-term strategy to reduce national debt to below a maximum of 60 % of GDP should be included in the framework for economic governance as it would reduce the cost of debt servicing and the cost of capital for private investments;

    (g) a binding framework within which euro area Member States consult each other and the Commission before taking major economic policy decisions, such as in the case of measures to tackle higher food and energy prices, should be established;

    (h) economic coordination should take the form of an integrated "European Economic and Employment Strategy" on the basis of the existing economic policy instruments - in particular the Lisbon Strategy, the Integrated Guidelines, the Sustainable Development Strategy, and the convergence and stability programmes; calls upon Member States' governments, under the leadership of the president of the Eurogroup, to support economic activity in a coherent manner, at the same moment and in the same direction;

    (i)  the Economic and Employment Strategy referred to in point (h) should recognise the potential of new and green technology as a cornerstone of economic growth coupled with a macro-economic policy mix;

    (j)  the financing of innovative enterprises, in particular SMEs, should be facilitated, inter alia by the establishment of a "European Smart Growth Fund" by the European Investment Bank;

    (k) the Annual Report on the euro area should deliver a more practical range of instruments and evaluations to make it possible to hold a more detailed dialogue between the various EU bodies that are involved in economic governance;

    (l)  a code of conduct between Parliament, the Council and the Commission, which would guarantee proper cooperation and the full involvement of those three EU institutions concerned in the appropriate further handling of the Integrated Guidelines, as key economic instruments needs to be established;

    (m) the institutional set-up up for economic policy coordination should be strengthened as follows:

    - Eurogroup formations should also be established in the field of competitiveness/industry, environment, employment and education;

    - the Eurogroup should be provided with a stronger institutional setting and more human resources;

    - the mandate of the president of the Eurogroup should be in line with the economic cycles of the Integrated Guidelines;

    - the Economic Policy Committee should be absorbed into the Economic and Financial Committee so as to constitute a single and coherent preparatory body for the Economic and Financial Affairs Council and the Eurogroup;

    - a representative of Parliament should be given observer status within the Eurogroup and at informal Council meetings;

    - meetings between the Troika, Parliament, the Commission and the Eurogroup should be organised, when necessary, four times a year;

    (n) a more regular and structured dialogue on macro-economic issues between Parliament, Commission and the Eurogroup, similar to the monetary dialogue between the Parliament and the ECB, should be established to take place at least quarterly, in order to deepen the existing frameworks and debate challenges facing the economy of the euro area; and

    (o) an active dialogue needs to be established between Parliament, the Eurogroup, the ECB and the European Economic and Social Committee for the purpose of conducting discussions about the appropriate mix of monetary, economic, exchange-rate, wage and structural policies;

    62. Takes the view that the EMU policy agenda for the next decade will be marked, in particular, by the challenges presented by the recent financial market turmoil and its implications for the real economy; notices positively, in this context, that Member States within the euro area are better equipped to face major shocks than in the past thanks to a common monetary policy and reforms carried out in recent years; with a view to largely combating the economic slowdown and high inflation, however, calls for:

    (a)  a coordinated response at the EU level, based on a common understanding of the problems and common follow-up measures while accepting some national specificities;

    (b)  ambitious and adjusted NRPs and a commitment to their implementation, including strong dialogues with social partners;

    (c) fully and timely implementation of the Financial Services roadmap, including follow-up actions and increased effectiveness of supervision in regards to the ongoing financial turmoil;

    (d) the enhancement of crisis-resolution arrangements by improving the EU rules on winding-up and by setting up clearly defined and unanimously acceptable arrangements of burden-sharing among the relevant Member States in cases of insolvency within cross-border financial groups;

    (e) completion of the tools used for designing monetary policy by the thorough analysis of factors that influence the stability and functioning of the financial system, inter alia as regards the transfer of monetary policy, the development of credit and financial assets, the characteristics of new products, and the concentration of risks and liquidity;

    (f)  a proactive European reaction within international forums, notably the FSF and the IMF and for the increase of common political decision-making processes; and

    (g) the formulation of a European Union voice within the G8 and the reflection of the European Union's role as a more efficient world-wide economic decision-making body while adjusting such a role to the consequences of globalisation and more dominant global financial markets;

    (h) better and more efficient coordination between the World Trade Organisation (WTO) and the Bretton Woods institutions (the IMF and the World Bank Group) in order to combat speculation and meet the challenges posed by the serious crisis; (i)  in view of the serious current monetary turbulence, a world monetary conference to be organised under the auspices of the IMF in order to hold global consultations on monetary questions; also consideration to be given to the feasibility of setting up a monetary disputes settlement mechanism within the framework of the IMF.


    ° °

    63. Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the European Economic and Social Committee, the president of the Eurogroup, and the governments and parliaments of the Member States.

    • [1]       OJ C 314E, 21.12.2006, p.125.
    • [2]       OJ C 175E, 10.7.2008, p.569.
    • [3]       Texts adopted, P6_TA(2008)0057.
    • [4]       Texts adopted, P6_TA(2007)0533.
    • [5]       OJ C 287E, 29.1.2007, p. 535.
    • [6]       OJ C 304E, 1.12.2005, p.132.
    • [7]       OJ C 74E, 20.3.2008, p. 780.
    • [8]       Texts adopted, P6_TA(2008)0357.
    • [9]       OJ C 298E, 8.12.2006, p.249.
    • [10]     OJ C 146E, 12.6.2008, p. 251.
    • [11]     Texts adopted, P6_TA(2008)0287.
    • [12]     OJ C 291E, 30.11.2006, p.118.
    • [13]     OJ C 157E, 6.7.2006, p. 73.
    • [14]     Texts adopted, P6_TA(2008)0425.


    The ten first years of the Economic and Monetary Union

    from the European Parliaments perspective

    The European Parliament has been closely involved in every stage of EMU, from the decision to launch the currency taken in Maastricht in 1992, leading to the 1st of January 1999 when the exchange rates of the participating Member States were irrevocably fixed against the euro and the European Central Bank was created, and finally to the subsequent physical changeover in 2002. The Parliament has also taken part in all the decisions relating to the enlargement of the Euro area since its beginning.

    During the first 10 years of the Economic and Monetary Union the European Parliament has played an active role. It has done this through its work in many areas, by co-legislating in the field of the internal market, in particular as relates to financial services, by being one of the decision makers in the enlargement of the euro area, by giving opinions and advice on the main macro-economic developments, by facilitating debate on current economic developments, by increasing transparency and accountability of economic policy decision-making, and by institutionalising an open and transparent monetary dialogue with the European Central Bank.

    Economic policy co-ordination

    As the only European Union body directly elected by its citizens, the European Parliament has worked for strengthening economic policy coordination and the implementation of the Lisbon Strategy for growth and jobs. Economic policy is an area in which the lack of transparency is particularly strong given the typically inter-governmental procedures foreseen by the Treaty[1].

    The European Parliament has therefore established itself as a major player at the EU level despite the limited formal powers that the Treaty grants it. We have therefore taken the approach of requesting a more open attitude of Member State Governments towards national parliaments, the EP and social partners. In the field of the co-ordination of fiscal policies, Parliament is under current Treaty provisions consulted in matters related to the adoption of secondary legislation on the Excessive Deficit Procedure and the SGP.

    Parliament has developed a variety of ways of making its opinions heard in Europe. This has been possible to an important extent thanks to the active interest that the ECON Committee has taken in bringing the Parliament to the fore.

    We have sought to develop the concept of a broad-based partner-ship approach, which would include social partners, civil society and public authorities according to national traditions and practices.

    ECON has established regular dialogue with those EU institutions and bodies which have a role in shaping economic policy in the Euro area and in the Union. Each semester, the incoming Council presidency (Finance Minister) is invited to present its work programme to the Committee. At the end of the six-month period, a review of achievements takes place. On both occasions, the presentation is followed by a discussion with the Committee. Another occasion of regular meetings between the ECON Committee and the Council (ECOFIN) is in the process leading to the adoption of the BEPGs as representatives of the Committee hold discussions with the Troika (the representatives of the current, previous and incoming Council presidencies).

    On its initiative, the ECON committee has also organised regular exchange of views with the President of the Eurogroup. These have taken place normally twice a year. In these meeting the President of the Eurogroup has explained past discussions and decisions by the group and its future work programme. These meetings with the members of the ECON have been useful, in particularly, as the Eurogroup is an informal body without formal decision-making power. These dialogues have played a role in increasing the transparency of the economic policy co-ordination undertaken by the Eurogroup.

    Within Parliament, the ECON Committee has the responsibility of conducting confirmatory hearings with the candidates to the Commission within its field of competence. In addition to the contacts between the European Parliament and the Commission foreseen by Community Law, the Committee conducts a regular dialogue with the Commissioner responsible for economic affairs. The Commissioner is invited to attend committee meetings, presenting the Commission's bi-annual economic forecasts, the report on public finance, the BEPGs and other major piece of news in the field of economic policy. The information concerning the Commission's activities and an assessment of the latest economic developments in the Member States and the Union is followed by a discussion, which permits an exhaustive exchange of views between the Commissioner and the ECON Members.

    Frequent and regular contacts and discussions with representatives of the Economic and Financial Committee and of the Economic Policy Committee (EPC) permitted ECON Members to seek clarification with regard to the EFC'S and the EPCs activities and to have an interesting exchange of views.

    Regular joint meetings of the Parliament and National Parliaments have played a role in helping develop a better ownership by national parliaments of the required economic policy coordination. Special attention has been given in this context to the Lisbon agenda for growth and jobs.

    The Broad Economic Policy Guidelines being the key policy document for the co-ordination of economic policies, Parliament has taken steps to make the process leading to the adoption of the BEPGs more open and integrative both at the European and national level. The European Parliament has tried to contribute in an effective way by making a preparatory report and a resolution before the Commission's yearly reports on the Integrated Policy Guidelines. To increase its influence ECON has also introduced the practice of discussions with the Troika. These discussions take place after the Commission's publication of the recommendations for the BEPGs and Parliament's preparatory report on the subject. In these encounters, Parliament's overall position on key issues has been discussed with the representatives of the Member States. In parallel the Committee has prepared a second report with amendments to the Commission recommendations for new guidelines. Already during the second stage the EMU informal consultation processes were put in place and the Parliament has since 1994 proposed and negotiated more formal amendments to the BEPGs. Our institution has worked in favour for an inter-institutional agreement between the three main institutions in order to clarify each roles and timetables, but this work has not been finalised nor formalised. 

    In its work the European Parliament has supported the renewed Lisbon strategy for growth and jobs. It has taken the view that the strategy must add value at Community level to improve the coherence of reforms and maximise positive spill-over effects and ensure that the reform agendas, such as structural reforms and investment in knowledge, effectively result in more and better jobs throughout the European Union.

    The Parliament has worked for streamlining the process of the Lisbon Strategy and the for combining the BEPGs and the Employment Guidelines into the Integrated Policy Guidelines. In addition we have closely monitored the specific guidelines for the euro area and thereby supported a closer co-ordination of economic policies.

    Our institution has been of the view that the specific euro area dimension of structural surveillance associated with the Lisbon Strategy should be strengthened by including measures that are needed to improve the functioning of the EMU. A first step in this direction has been the focus on the euro area in the Commission’s Annual Progress Reports on the state of implementation of the Lisbon Strategy.

    In addition the Commission's Annual Reports on the Euro Area has provided a good basis for a comprehensive discussion of the overall economic situation in the Euro area and challenges ahead. It has also allowed the European Parliament to express its views and formulate priorities on economic policies and governance.

    The European Parliament has, however, regretted the weak visibility of the Lisbon Strategy in the national politics of many Member States. Our institution has therefore stressed the need of better involvement of social partners, national parliaments, regional and local authorities as well as civil society in order to ensure its effective implementation.

    The European Parliament has given its support the Stability and Growth Pact as revised in March 2005. In its 2004 resolution to the Spring Council, the European Parliament expressed its conviction that an intelligent reform of the SGP is needed to bring Europe's economy more swiftly back into balance and to allow improvements in Europe's economic, social and environmental sustainability. Generally the Stability and Growth Pact has proven its value and must consequently kept in future, in order to strengthen the stability and reliability of the euro area. The Parliament has taken the opinion that sound fiscal policy must be a pre-condition for sustained growth and job creation in each Member State in line with the relevant provisions of the Treaty as common responsibility of the European Union.

    Our institution has stressed the importance that all Member States, at least those belonging to the euro area, coordinate their different national fiscal calendars and base their budgetary projections on similar criteria in order to avoid disparities caused by the use of different macro-economic forecasts (global growth, EU growth, price of oil barrel, interest rates) and other parameters. The European Parliament has urged the Commission to ensure the validity of available data from Member States.

    Even before the current financial turbulence and economic tension the Parliament has argued that growing global imbalances, aggregate demand and global inflationary pressure may become a significant challenge for monetary policy. Concern about the Euro exchange rate volatility that may harm the competitiveness of the European economy has also been raised during these years.

    Monetary Policy and Monetary Dialogue

    Ever since the project of an Economic and Monetary Union began in the early 1990s, the European Parliament, under the auspices of the Monetary Subcommittee first and then the ECON Committee, has been intimately involved in its design, development and advancement.

    Already in 1992 the Sub-committee was strongly involved in monitoring and negotiating secondary legislations for the first, second and third stage of EMU and in the design of the information campaign. The European Parliament was also involved in the discussion on what kind of bank notes and coins should be issued in the interest of consumer. In particular, Parliament has played a fundamental role of oversight and control of Euro area monetary policy since this task was transferred upon the European Central Bank (ECB) in 1999.

    This responsibility, enshrined in the EU Treaty, means that the European Parliament is the best placed European institution that can guarantee real democratic accountability of our central bank, an entity that, given the institutional structure of the EU, is the most independent central bank in any political system in history. Whilst the independence of the ECB must be fully respected, the Bank cannot be absolved from its responsibility to provide information on its activities and engage in regular dialogue with democratically elected politicians.

    It can thus be argued that the work of the European Parliament in the field of monetary policy has been successful as regards democratic accountability. Through its reports and opinions, it defined the way for these dialogues. ECON has managed to hold the ECB accountable through its numerous initiatives and in particular, by establishing the practice of the quarterly monetary dialogues.

    This accountability of the ECB has been fought hard for by the Parliament, given that the Treaty does not spell out the exact form of these dialogues. It can be argued that nowadays the European Parliament has taken on a role even stronger than that of the US Congress vis-à-vis the Federal Reserve.

    Already on a report from March 1998 on democratic accountability in the third phase of EMU the Parliament called for setting out the common framework for the Treaty based dialogue between the European Parliament and the ECB on monetary affairs. The Parliament made clear that it possesses some powers in monetary affairs, in particularly, as the Treaty and the Statute of the ECSB and ECB does not only give the ECB rights but also duties.

    The relationship between the Parliament and the ECB is based on the following fields of action:

    (a) The procedure for appointing members of the ECB’s Executive Board;

    (b) Reporting to the European Parliament; and

    (c) The ECB’s publications, and especially the annual report presented to the Parliament, as well as the convergence report.

    Appointments to the Executive Board can only happen after Parliament has been consulted. Thus the Parliament becomes the best-placed European institution to ensure democratic accountability of key ECB positions. The consultation process takes the form of public hearings hosted by ECON. This has proved to be the best way of obtaining the necessary information about a candidate before the EP's final recommendation. The main objective of the hearings is to learn more about the personality and views of the candidate on key economic and monetary policy questions, on how the ECB should be run and on his or her conception of democratic accountability of the ECB. Committee Members then take an immediate decision on the suitability of the candidate for the position, which is then sent for ratification to the Plenary.

    There is also a longer-term purpose: this exercise helps Parliament's Members to get to know better the Members of the Executive Board of the ECB, who will have to appear routinely thereon before the Committee.

    Under the Treaty[2], the ECB's President and other members of its Executive Board may, at the request of either side, "be heard by the competent committees of the European Parliament". This provision has been transformed into an outright transparency and supervisory commitment based on regular exchanges of views, established by mutual agreement upon the behest of ECON, between the two institutions. The President of the ECB or, occasionally, the Vice-President appears before a televised meeting of ECON Committee at least every three months to answer questions on the economic outlook and on the conduct of monetary policy in the Euro area. In total 38 monetary dialogues have taken place since 1999. Members of the Committee select two special topics on which special attention should be given by the President of the ECB. In preparation for these meetings, Parliament receives regular advance briefing from a panel of twelve specialist academic and other advisors (these papers and the verbatim reports of the meetings are available to the homepage of ECON). After an introduction by the ECB President, a questions and answers session has taken place. The President of the ECB has also answered to written questions put forward by Members at any time.

    The annual reports of the ECB are instruments to create greater transparency in monetary policy. The ECB's Annual Reports are presented for debate in the European Parliament by the ECB President, and form the basis of parliamentary resolutions, prepared each year by ECON. It is an opportunity for Members to yearly assess the developments in monetary policy. The debates take place in the plenary session and constitute a solemn moment for the ECB President to give a broad account of the year, and to formulate future initiatives.

    ECON has consistently pressed the ECB to develop, and to make public, the models and other tools of economic analysis on which its monetary policy decisions are based. Its resolution on the ECB report in 1999 called on the Bank to publish macro-economic forecasts on a six monthly basis, together with the research and macro-economic model on which these were based; and also reports on national economies (similar to the Beige Book in the United States). The following year's resolution was able to welcome the commitment by the ECB to publish both forecasts and model.

    A recurrent issue concernes the transparency of decision taking by the ECB's Governing Council. The 1999 and subsequent reports have specifically called for: "summary minutes taken at meetings of the ECB Governing Council to be published shortly after the following meeting reporting explicitly the arguments for and against the decisions taken, as well as the reasoning used in reaching these decisions.", with the balance of votes also being published, but anonymously. So far, the ECB has failed to accept Parliament's arguments in this area.

    The role of the ESCB and ECB in the running and supervision of the Euro area financial system is not entirely clear-cut. Already in a Parliament's resolution on the ECB Annul report from 2000 stressed "the need for close involvement of the ESCB in macro-prudential supervision" and the role of the ECB in safeguarding financial stability.

    In its monetary dialogue with the ECB, the Parliament strives to encourage a better policy mix and increase the legitimacy of the monetary policy conducted. Joint dialogues between the Eurogroup, the Commission and Parliament similar to the monetary dialogue between Parliament and the ECB have also taken place.

    Enlargement of the Euro area

    One important facet of Parliament's legislative[3] role has to do with whether an EU Member State has qualified to join the euro area or not: the final decision rests with Member State Governments, but, again, only once Parliament has delivered its opinion. Since 1998 Greece, Malta, Cyprus and Slovenia have joined the Euro area. Next in turn is Slovakia. The enlargement of the euro area is on every single case historically important challenge both for Member State concerned and the rest of the euro area. The Parliament has therefore taken the view that the process of economic convergence of a Member State must be carefully monitored and the path towards their adoption of the Euro should be appropriate to the actual state of their economies.

    In the context of the consultation procedure, the European Parliament has issued an opinion on each proposal for a Council decision in accordance with Article 122 (2) of the Treaty, i.e. for each euro area enlargement. The Parliament has also requested an earlier consultation by the Commission in order to have longer time to prepare its opinion after an in-depth analysis of the situation. An ECON delegation also went to Slovakia in early 2008, in order to gather more information before issuing its opinion.

    The issue of enlargement has also been addressed at several occasions such as special report from 2006 on the enlargement of the euro area and in the context of the annual reports on the euro area and on the ECB annual report.

    As for the general pre-conditions for the future enlargement of the euro area, the Parliament has always advocated strict compliance with the Maastricht Treaty's convergence criteria, and strongly opposed special provisions concerning the fulfilment of the Maastricht criteria. It has also said it believes that the long-term stability of the euro area should also be assessed in terms of its capacity to absorb new entrants. Turning to the technical pre-conditions for the enlargement of the euro area, the Parliament has asked acceding Member States to pay particular attention to consumer protection during the changeover phase, and recalled the necessity to start early and extensive citizen information campaigns in applicant Member States.

    Our institution has also set special requirements for applicants for accession, pointing out that a premature accession to the Euro area might lead to unexpected developments in the economic convergence process and that the enlargement of the Euro area facilitates economic convergence process and contributes to strengthening of the Euro area as a whole.

    Euro communication strategy

    The Parliament has expressed its views on the implementation of an information and communication strategy on the euro and EMU, noting as soon as 2005 that the apparent unpopularity of the euro among certain citizens was in contradiction with the fact that the euro is possibly the most successful European project ever launched. It has been of the view that the single currency remains a communication priority for the EU, believing that the benefits of the euro must continue to be sold and explained to the public at length. Parliament has in this respect called for a series of specific actions to foster the acceptance of the euro.

    Financial Market integration

    As a legislator and policy maker the European Parliament has had a major role in the integration of the financial markets in the European Union. Our legislative work has focused upon delivering an integrated market for the benefits of the consumers. The Financial Services Action Plan adopted in 1999 was finalised in 2005. The work has, however, continued since with the needs to respond to market developments or shortcomings. Only to mention one topic in particular, the European Parliament fought many years for an aligning payment charges throughout the euro area and a regulation was finally adopted in 2001. In addition to this work to establish a Single Euro Payment Area (SEPA) the legislative work has covered insurance services, such as reinsurance and solvency, banking services, such as capital requirements, securities markets, such as investment services, and supervisory and regulatory issues in general in the framework of the Lamfalussy process. The Parliament have been very active in setting up the Lamfalussy framework in order to improve financial market supervision and regulation. It has it this process made sure that it has the same powers as the Council both being the legislators. It has also worked for making this process more transparent on all stages.

    External representation of the euro

    Whether there should be an exchange-rate policy for the Euro, and, if so, who exactly would be responsible for it, have been more or less open questions. The Treaty is not clear in this respect. Nor is it clear who can speak for the Euro area at international level: the ECB President, the Commission, the Council Presidency or the Euro-group Presidency (where this differs from the Council Presidency). Parliamentary reports have therefore called for "enhanced representation of the Euro zone in international policy-making institutions", and for "the selection of a single representative of the Euro area".

    According to the views taken by the European Parliament the European Union and the Member States have a shared responsibility for addressing the challenges, opportunities and uncertainties facing citizens as a result of globalisation. Our institution has supported the view that the external dimension of the internal market needs to be developed.

    The European Parliament has stressed that further steps would be needed before the external representation of the euro area would commensurate with its growing importance in the global economy. Parliamentary reports have therefore called for "enhanced representation of the Euro zone in international policy-making institutions", and for "the selection of a single representative of the Euro area".

    • [1]  The legislative framework in the field of economic policy is laid down in Articles 98, 99 and 104 of the Treaty
    • [2]  Article 113 (3) of the Treaty stipulates that the ECB shall address an annual report on the activities of the ESCB and on the monetary policy of both the previous and current year to the European Parliament, the Council and the Commission, and also to the European Council. The President of the ECB shall present this report to the Council and to the European Parliament, which may hold a general debate on that basis. The President of the ECB and the other members of the Executive Board may, at the request of the European Parliament or on their own initiative, be heard by the competent committees of the European Parliament.
    • [3]  Article 122(2) of the EC Treaty states that the ECOFIN Council, on the basis of the reports from the Commission and the ECB, after consulting the European Parliament and after discussion in the Council, meeting in the composition of the Heads of State or Government, shall, acting by a qualified majority on a proposal from the Commission, decide which Member States with a derogation fulfil the necessary conditions on the basis of the criteria set out in Article 121(1), and abrogate the derogations of the Member States concerned.

    OPINION of the Committee on International Trade (10.9.2008)

    for the Committee on Economic and Monetary Affairs

    on EMU@10: The first ten years of Economic and Monetary Union and future challenges

    Rapporteur: Jean-Pierre Audy


    The Committee on International Trade calls on the Committee on Economic and Monetary Affairs, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

    1.  Welcomes the fact that, ten years after its creation, the Economic and Monetary Union is considered a technical and political success and that, since its introduction, the euro has increasingly established itself alongside the US dollar as a currency for trade transactions not only between eurozone countries and third countries but beyond;

    2.  Considers that the euro system, its monetary policy and the resulting stability of the euro have made a contribution towards the economic and financial integration of the world economy;

    3.  Points to the vital link between monetary policy and trade policy at global level, something demonstrated in countless studies, and stresses in this connection the positive role played by exchange rate stability in ensuring sustainable growth of international trade;

    4.  Points out that the increasing use of the euro as an international trading currency is benefiting the eurozone members in particular, since it reduces the exchange rate risk for firms from those states and hence the cost of international trade;

    5.  Welcomes the fact that, by strengthening the internal market, the introduction of the euro has improved the international competitiveness of EU firms and strengthened the weight of the EU in multilateral and bilateral trade negotiations;

    6.  Welcomes the fact that Economic and Monetary Union has increased the attractiveness of the euro zone for foreign direct investment;

    7.  Considers that inflation is a global reality and that in an open economy it cannot be combated solely by European monetary policy; considers that, by successfully discharging the mandate to give priority to price stability, the European Central Bank has strengthened confidence in the euro and hence made a crucial contribution to the euro's international attractiveness;

    8.  Regrets that, in the EMU@10 communication, the Commission has not conducted a more detailed and precise analysis of the euro's international role; calls on the Commission to produce a detailed report on the external dimension of the common monetary policy and on its repercussions for the euro zone's economic and trading performance;

    9.  EU commercial policy cannot be based on exchange rates when commercial policy instruments (duties, quotas, etc.) are ponderous and are therefore not suitable for warding off currency fluctuations;

    10. Welcomes the openness of the euro zone, and considers that the current rising value of the euro possibly has negative effects, namely it has affected exports and encouraged imports into the internal market, as well as positive effects in helping the EU economy face the dramatic oil price rise; takes note, in this connection, of the concerns of a host of EU firms and notes that it is of great importance for EU companies and workers particularly in the industrial sector, to have correctly valued currencies in all countries for the sake of their international competitiveness; At the same time sees the prospect, as a result of increased competitive pressure, that EU firms will have to improve their competitiveness further and hence, in the medium term, could have an edge over their rivals;

    11. Stresses that the monetary policies pursued by some of the EU's partners are designed to under-value their currency, something which has an unfair impact on trade and could be seen as a non-tariff barrier to international trade;

    12. Advocates better and more efficient coordination between the World Trade Organisation (WTO) and the Bretton Woods institutions (International Monetary Fund (IMF) and World Bank Group) in order to combat speculation and meet the challenges posed by the serious crisis not just in the monetary sector, but also in the financial, energy and food sectors which is currently threatening all countries; considers that such coordination would contribute towards monetary and financial stability in the world economy;

    13. Proposes that, in view of the serious current monetary turbulence, a world monetary conference be organised under the auspices of the IMF in order to hold global consultations on monetary questions;

    14. Proposes also that consideration be given to the feasibility of setting up a monetary disputes settlement body modelled on the trade disputes body established at the WTO, a body which could help stabilise the world monetary system, reduce the risk of abusive practices and give world markets the confidence they need to cope successfully with new economic challenges posed, in particular, by globalisation, increasing scarcity of natural resources and the emergence of new trading powers;

    15. Supports the Commission proposal to develop common EU monetary positions by consolidating representation of the euro area and ultimately securing a single seat for the euro area in international financial institutions and fora.


    Date adopted





    Result of final vote







    Members present for the final vote

    Carlos Carnero González, Daniel Caspary, Françoise Castex, Christofer Fjellner, Béla Glattfelder, Ignasi Guardans Cambó, Jacky Hénin, Alain Lipietz, Marusya Ivanova Lyubcheva, Erika Mann, Helmuth Markov, David Martin, Vural Öger, Georgios Papastamkos, Godelieve Quisthoudt-Rowohl, Peter Šťastný, Robert Sturdy, Gianluca Susta, Daniel Varela Suanzes-Carpegna, Corien Wortmann-Kool

    Substitute(s) present for the final vote

    Jean-Pierre Audy, Albert Deß, Elisa Ferreira, Vasco Graça Moura, Eugenijus Maldeikis, Rovana Plumb, Salvador Domingo Sanz Palacio, Zbigniew Zaleski


    Date adopted





    Result of final vote







    Members present for the final vote

    Paolo Bartolozzi, Zsolt László Becsey, Pervenche Berès, Sharon Bowles, Udo Bullmann, Jonathan Evans, Elisa Ferreira, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Donata Gottardi, Benoît Hamon, Gunnar Hökmark, Karsten Friedrich Hoppenstedt, Othmar Karas, Wolf Klinz, Christoph Konrad, Andrea Losco, Bernhard Rapkay, Dariusz Rosati, Antolín Sánchez Presedo, Olle Schmidt, Margarita Starkevičiūtė, Ieke van den Burg

    Substitute(s) present for the final vote

    Harald Ettl, Werner Langen, Klaus-Heiner Lehne, Margaritis Schinas