The euro area's large economic and financial size, and the existence of a single monetary and exchange rate policy for the euro area, make EU policy decisions and economic developments increasingly relevant at the world economy’s scale. Yet, in the international financial institutions, the EU and the euro area are not represented as one. For example, every single Member State has its own seat in the International Monetary Fund (IMF). Furthermore, these seats are not regrouped as a single constituency within the IMF, but are rather dispersed over geographically distant constituencies, thus diminishing the political weight of the euro area in that organisation.

As part of its package aimed at further improving the governance of the Economic and Monetary Union (EMU) and following up on the short-term reform proposals made in the Five Presidents' Report, on 21 October 2015 the Commission tabled a proposal for a Council Decision under Article 138 TFEU laying down measures with a view to gradually establishing unified representation of the euro area in the International Monetary Fund (IMF). At the same time, the Commission issued a communication setting out the path towards an increasingly unified representation of EMU, in particular in areas where EMU is being deepened further, for instance as regards issues relevant to banking union.

The purpose of the Commission’s proposal is to ensure a more unified representation of the euro area within international economic fora, such as the IMF. The Commission believes that it would inter alia ‘better reflect the economic and financial weight of the euro area in the world economy’, and ‘would allow the euro area to play a more active role in the IMF and to shape effectively the future global financial architecture’. In its 2017 work programme, the Commission invited the Council to accelerate the adoption of the proposal.

This first step is in line with a long-standing demand from the European Parliament. In several resolutions, the European Parliament has indeed called on the Commission to present a proposal on the single external representation of the euro area in international financial institutions, on the basis of Article 138 TFEU.

In addition, in its resolution of 17 December 2015, the European Parliament ‘asks the Commission to ensure that the international representation of the euro is subject to the democratic scrutiny of Parliament’.

More recently, it reiterated in an own initiative report on the EU role in the framework of international financial, monetary and regulatory institutions and bodies (Rapporteur: Sylvie Goulard, ALDE, France) that ‘progressive streamlining of the EU representation should be implemented over the next years, first through enhanced coordination and then, after an assessment, through the unification of seats’. At the same time, high standards of democratic legitimacy, transparency and accountability should be integral to the development. The report includes a call for 'the adoption of an interinstitutional agreement with the aim of formalising a 'financial dialogue', to be organised with the European Parliament for the purpose of establishing guidelines regarding the adoption and the coherence of European positions in the run-up to major international negotiations, making sure that these positions are discussed and known ex ante and ensuring a follow-up, with the Commission reporting back regularly on the application of these guidelines and scrutiny'. The Parliament considered that:

• 'The European institutions, the Member States and, where appropriate, the heads of the international organisations concerned [should] be invited to attend';
• 'The nature (public or in camera) and frequency of this dialogue would depend on practical requirements';
• 'Active involvement of national parliaments at their respective levels, by controlling the positions taken by the representatives of the member states concerned, [was] also necessary'. In the future, the Commission may take additional initiatives in order to reinforce the representation of the euro area in other international fora such as the World Bank. In the longer term (i.e. stage 2 in the Five Presidents’ Report), a full-time president of the Eurogroup could represent the euro area in international fora.

The Ecofin Council of 10 November 2015 held a first exchange of views on the issue. On 17 June 2016, it asked the Economic and Financial Committee to continue work on proposals to unify euro-area representation and to analyse related issues. Work is still in progress at working party level.

In his State of the Union 2017 speech President Juncker has called on Council to swiftly adopt the Commission proposal, a position that was reiterated in a Communication published on 5 December 2018. This is a procedure where Parliament is not participating in the legislative process.

References:

• EP Legislative Observatory, Procedure file on Global economic governance, 2011/2011(INI)
• Juncker, J-C., Five Presidents’ Report on strengthening Europe's EMU, 2015
• European Commission, Proposal for a Council Decision laying down measures in view of progressively establishing unified representation of the euro area in the International Monetary Fund, COM(2015)603, 21 October 2015
• European Commission, Communication on a roadmap for moving towards a more consistent external representation of the euro area in international fora, COM(2015)602, 21 October 2015
• European Commission, Communication on the Commission Work Programme 2017, COM(2016) 710
• European Parliament, Resolution of 25 October 2011 on Global Economic Governance, 2011/2011(INI)
• European Parliament, Resolution of 17 December 2015 on completing Europe’s Economic and Monetary Union, 2015/2936(RSP)
• European Parliament, Resolution of 12 April 2016 on the EU role in the framework of international financial, monetary and regulatory institutions and bodies, 2015/2060(INI)
• Council, Main results of the ECOFIN Council meeting of 10 November 2015
• Council, Outcome of the ECOFIN Council meeting of 17 June 2016, 10324/16

Author: Christian Scheinert, Members' Research Service, legislative-train@europarl.europa.eu