Economic and Monetary Union in Europe
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The Missing Pieces of the Euro Architecture
Policy Contribution Issue n˚28 | October 2017 The missing pieces of the euro architecture Grégory Claeys Executive summary This policy contribution describes the institutional flaws of the single currency Grégory Claeys (gregory. revealed by the euro crisis and the institutional reforms that were put in place during and [email protected]) is a in the aftermath the crisis, and evaluates the remaining fragilities of the architecture of the Research Fellow at Bruegel European monetary union. In order to achieve a more resilient monetary union in Europe, we propose: 1) to A version of this paper was form a ‘financing union’ through the completion of the banking union and the promotion of prepared for the conference an ambitious capital markets union to provide private risk sharing between the countries of ‘20 years after the Asian the monetary union; and 2) to improve the defective macroeconomic policy framework to Financial Crisis: Lessons, avoid a repeat of the mistakes of recent years. Challenges, Way Forward’, Tokyo, 13-14 April 2017, The latter involves: reforming the European Stability Mechanism / Outright Monetary organised jointly by the Asian Transactions framework to clarify its functions and improve its governance system, reforming Development Bank and the the European fiscal rules to make them more effective to achieve the two desirable objectives Asian Development Bank of sustainability and stabilisation, and creating a small-scale euro-area stabilisation tool to Institute, and was published provide public risk sharing in case of significant shocks that members of the monetary union as ADBI Working Paper No. cannot deal with alone and to help manage the euro-area aggregate fiscal stance. -
Emu and the Adjustment to Asymmetric Shocks the Case of Italy 1
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics WORKING PAPER SERIES NO 1128 / DECEMBER 2009 EMU AND THE ADJUSTMENT TO ASYMMETRIC SHOCK S THE CASE OF ITALY by Gianni Amisano Nicola Giammarioli and Livio Stracca WORKING PAPER SERIES NO 1128 / DECEMBER 2009 EMU AND THE ADJUSTMENT TO ASYMMETRIC SHOCKS THE CASE OF ITALY 1 by Gianni Amisano 2, Nicola Giammarioli 3 and Livio Stracca 4 In 2009 all ECB publications This paper can be downloaded without charge from feature a motif http://www.ecb.europa.eu or from the Social Science Research Network taken from the €200 banknote. electronic library at http://ssrn.com/abstract_id=1517107. 1 We thank an anonymous referee and participants in the 50th meeting of the Italian Economic Association. The views expressed herein are those of the authors and should not be attributed to the IMF and the ECB, their Executive Board or management. 2 European Central Bank, DG Research, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany; e-mail: [email protected] 3 International Monetary Fund, 700 19th Street, N. W., Washington, D. C. 20431, United States; e-mail: [email protected] 4 Corresponding author: European Central Bank, DG International and European Relations, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany; e-mail: [email protected] © European Central Bank, 2009 Address Kaiserstrasse 29 60311 Frankfurt am Main, Germany Postal address Postfach 16 03 19 60066 Frankfurt am Main, Germany Telephone +49 69 1344 0 Website http://www.ecb.europa.eu Fax +49 69 1344 6000 All rights reserved. -
The Banking Union, Under Way and Here to Stay
www.pwc.es www.ie.edu The Banking Union, under way and here to stay A report by the PwC and IE Business School Centre for the Financial Sector. This report has been coordinated by Luis Maldonado, managing director of the PwC and IE Business School Centre for the Financial Sector February 2014 Contents Introduction 4 Executive summary 10 The Single Supervisory Mechanism, the key to the entire process 14 The entrance exam. Crossing the gorge. 22 The SSM from the inside 24 The Single Resolution Mechanism, a crucial component 26 Operations. This is how the SRM will work 32 A Safety Net with Loopholes 34 Emergency liquidity assistance, the taboo last resort 38 The ESM, a cannon of limited use 40 A Single Rulebook to prevent fragmentation 42 Learning from mistakes 47 Conclusions and recommendations 48 References 51 3 Introduction The European Union’s progress towards Since then, spectacular progress has integration has always been marked by been achieved in a little more than a firm steps and inconsistent political year and a half. Today there is impulses, guided to a large extent by considerable consensus on the developments in the international components that should constitute the economic environment. The banking union: a Single Supervisory implementation of the Economic and Mechanism (SSM) for the entire euro Monetary Union (EMU) and the creation area; a Single Resolution Mechanism of the euro constitute a key – and (SRM), with a single European authority fortunately irreversible – advancement, able to take over a bank’s management, as the European Central Bank reiterated restructure it and even wind up its at the height of the sovereign debt crisis operations if necessary, and a Single in 2012. -
Coronavirus and the Cost of Non-Europe
Coronavirus and the cost of non-Europe An analysis of the economic benefits of common European action IN-DEPTH ANALYSIS EPRS | European Parliamentary Research Service European Added Value Unit PE 642.837 – May 2020 EN European integration has been key to driving economic growth for half a century, generating significant gains in gross domestic product (GDP) for EU Member States both collectively and individually. This EPRS paper focuses on the economic benefits of common action, and what is at risk if the current coronavirus crisis and its aftermath were to stall or reverse the process of European integration. It attempts to quantify the losses entailed if the economic downturn caused by the pandemic were to result in the gradual dismantling of the EU project and a parallel failure to take advantage of the unexploited potential of collective public goods that could yet be created. In this respect, the study makes use of two complementary concepts: European added value, which attempts to identify the benefit of existing collective action at European level, and the cost of non-Europe, which assesses the benefits foregone by not taking further action in the future. Even cautious estimates suggest that dismantling the EU single market would cost the European economy between 3.0 and 8.7 per cent of its collective GDP, or between €480 billion and €1 380 billion per year. In parallel, the potential cost of non-Europe in 50 policy fields was identified by EPRS in 2019 as around €2.2 trillion or 14 per cent of EU GDP (by the end of a ten-year running-in period). -
The Economic and Monetary Union: Past, Present and Future
CASE Reports The Economic and Monetary Union: Past, Present and Future Marek Dabrowski No. 497 (2019) This article is based on a policy contribution prepared for the Committee on Economic and Monetary Affairs of the European Parliament (ECON) as an input for the Monetary Dialogue of 28 January 2019 between ECON and the President of the ECB (http://www.europarl.europa.eu/committees/en/econ/monetary-dialogue.html). Copyright remains with the European Parliament at all times. “CASE Reports” is a continuation of “CASE Network Studies & Analyses” series. Keywords: European Union, Economic and Monetary Union, common currency area, monetary policy, fiscal policy JEL codes: E58, E62, E63, F33, F45, H62, H63 © CASE – Center for Social and Economic Research, Warsaw, 2019 DTP: Tandem Studio EAN: 9788371786808 Publisher: CASE – Center for Social and Economic Research al. Jana Pawła II 61, office 212, 01-031 Warsaw, Poland tel.: (+48) 22 206 29 00, fax: (+48) 22 206 29 01 e-mail: [email protected] http://www.case-researc.eu Contents List of Figures 4 List of Tables 5 List of Abbreviations 6 Author 7 Abstract 8 Executive Summary 9 1. Introduction 11 2. History of the common currency project and its implementation 13 2.1. Historical and theoretic background 13 2.2. From the Werner Report to the Maastricht Treaty (1969–1992) 15 2.3. Preparation phase (1993–1998) 16 2.4. The first decade (1999–2008) 17 2.5. The second decade (2009–2018) 19 3. EA performance in its first twenty years 22 3.1. Inflation, exchange rate and the share in global official reserves 22 3.2. -
Two Proposals to Resurrect the Banking Union by Luis Garicano
Two proposals to resurrect the Banking Union: the Safe Portfolio Approach and SRB+1 Paper prepared for ECB Conference on “Fiscal Policy and EMU Governance”, Frankfurt, 19 December 2019 Luis Garicano2 Member of the European Parliament Professor of Economics and Strategy, IE Business School (on leave) Abstract Nearly eight years after its inception, the European Banking Union is crumbling. None of its two stated objectives—breaking future contagion between banks and sovereigns, and creating a true single market for banks—have been achieved. In fact, the banking market is more fragmented now than it was at the inception of the Banking Union, as home and host regulators for cross-border European banks fight to ensure sufficient capital and liquidity in each market that a bank might operate in. The reason for this state of affairs is that, of the planned “three pillar” structure of the Banking Union, only its “first pillar” (the Single Supervisory Mechanism), is working smoothly. The “second pillar”, the Single Resolution Mechanism, is being circumvented, along with the bank resolution framework, while Member States continue to spend taxpayer money to prevent investors from incurring losses. The “third pillar”, a European deposit insurance, has been paralyzed for four years. This paper aims to provide a politically and economically viable path to revive our Banking Union. This path rests on two legs. First, creating a model “Safe Portfolio” and incentivizing banks to move toward it. Such “Safe Portfolio” would be the basis for a market-provided European Safe Asset without joint liability. Second, empowering the Single Resolution Board by reforming the resolution framework and setting up a European deposit insurance. -
The European Monetary System and European Integration: Marriage Or Divorce?
THE EUROPEAN MONETARY SYSTEM AND EUROPEAN INTEGRATION: MARRIAGE OR DIVORCE? by Patrick M. Crowley Saint Mary's University Halifax and McGill University Montreal Canada April 1995 Acknowledqements: I am grateful to my supervisors Robin Rowley, John McCallum and Vicky Zinde- Walsh at McGill University, Montreal for their help and guidance. This paper is culled from my Ph.D. thesis, and is therefore preliminary. All comments are welcome. Paper prepared for the May , 1995, European Community Studies Association Meetings in Charleston, South Carolina, USA. Abstract This paper presents the various economic approaches to achieving monetary union, particularly in the context of European Economic and Monetary Union (EMU). It also evaluates the implications of the Maastricht Treaty, in the light of the current state of economic convergence and given the economic convergence criteria embodied in the Treaty, in terms of economic policy for individual Member States and for the European Union (EU) as a whole. Comparisons are made with other more mature federations, and a case for greater fiscal federalism post-1999 is presented. The paper concludes by assessing the options for the EU at its scheduled inter-governmental conference in 1996, for amending or replacing the Treaty. Contents I. Background and Introduction II. The Road to EMU a) Generic Approaches b) The Transition Process c) Currency Stabilisation and the Role of the EMS III. Fiscal Federalism a) The Subsidiarity Principle b) Regional Disparities c) Budgetary Fairness and Convergence under Maastricht IV. The Maastricht Convergence Criteria a) The Criteria b) Regional Disparities c) Dynamic "let-outs" d) Credibility Issues V. The Maastricht Treaty and Evaluation of Feasible Alternatives a) A Critical Assessment of Maastricht b) Amending the Treaty c) Replacing the Treaty d) EMU - Economic Jingoism or Pyrrhic Victory? VI. -
Occasional Paper Series
Occasional Paper Series Ettore Dorrucci, The four unions “PIE” on Demosthenes Ioannou, Francesco Paolo the Monetary Union “CHERRY”: Mongelli, and a new index of European Institutional Alessio Terzi Integration 30° No 160 / February 2015 6E E 3,5E 6E E E 80° 100% 53% E 6E 7,5E Note: This Occasional Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. Acknowledgements The authors would like to thank Ad van Riet, Marta Wieczorek, Benoît Cœuré, David Clarke, Iñigo Arruga Oleaga, Philippe Moutot, Carmelo Salleo, Gilles Noblet, and Michaela Posch for helpful comments. We also received useful feedback at the 2013 Villa Mondragone Seminar in Rome, the CES Conference in Washington D.C. in March 2014, and the 45th Meeting of the ECB Committee on Financial Integration in September 2014. We would like to thank Rita Sapage and Sabine Prennig for helpful assistance. The views expressed in this paper do not necessarily reflect those of the European Central Bank, and we remain responsible for any errors or omissions. This paper is in memory of Tommaso Padoa-Schioppa, a scholar and architect of European integration. © European Central Bank, 2015 Postal Address 60640 Frankfurt am Main, Germany Telephone +49 69 1344 0 Internet www.ecb.europa.eu All rights reserved. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged ISSN 1725-6534 (online) EU catalogue No QB-AQ-15-003-EN-N (online) Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the ECB or the authors. -
The First Twenty Years of the European Central Bank: Monetary Policy
Working Paper Series Philipp Hartmann, Frank Smets The first twenty years of the European Central Bank: monetary policy No 2219 / December 2018 Disclaimer: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. Abstract: On 1 June 2018 the ECB celebrated its 20th anniversary. This paper provides a comprehensive view of the ECB’s monetary policy over these two decades. The first section provides a chronological account of the macroeconomic and monetary policy developments in the euro area since the adoption of the euro in 1999, going through four cyclical phases “conditioning” ECB monetary policy. We describe the monetary policy decisions from the ECB’s perspective and against the background of its evolving monetary policy strategy and framework. We also highlight a number of the key critical issues that were the subject of debate. The second section contains a partial assessment. We first analyze the achievement of the price stability mandate and developments in the ECB’s credibility. Next, we investigate the ECB’s interest rate decisions through the lens of a simple empirical interest rate reaction function. This is appropriate until the ECB hits the zero-lower bound in 2013. Finally, we present the ECB’s framework for thinking about non-standard monetary policy measures and review the evidence on their effectiveness. One of the main themes of the paper is how ECB monetary policy responded to the challenges posed by the European twin crises and the subsequent slow economic recovery, making use of its relatively wide range of instruments, defining new ones where necessary and developing the strategic underpinnings of its policy framework. -
Europe's Single Supervisory Mechanism and the Long Journey
Policy Brief NUMBER PB12-24 DECEMBER 2012 Bank] for banks in the euro area the ESM [European Stability Europe’s Single Supervisory Mechanism] could, following a regular decision, have the possibility to recapitalize banks directly” (Euro Area Summit Mechanism and the Long Statement 2012). Th is statement was received by the investor community and the European public as marking the initial step towards a European banking union, i.e., a shift of the Journey Towards Banking key instruments of banking policy from the national to the European level to enable the formation and maintenance of Union an integrated European banking system. Discussions have proceeded rather swiftly from this Nicolas Véron starting point. On September 12, 2012, the European Commission published a proposal for a council regulation to create the single supervisory mechanism (SSM) with the Nicolas Véron, visiting fellow at the Peterson Institute for International Economics since October 2009, is also a senior fellow at Bruegel, the ECB at its core, or “SSM regulation.” Simultaneously, the Brussels-based economics think tank in whose creation and development Commission published a proposal for a regulation of the he has been involved since 2002. His earlier experience combines both European Parliament and the Council to amend the 2010 text public policy, as a French senior government offi cial, and corporate fi nance that created the European Banking Authority (EBA) and adapt in the private sector. He has published numerous policy papers on fi nancial the EBA’s governance to the creation of the SSM, or “EBA systems and fi nancial regulation at the global and European level, and is the author of Smoke & Mirrors, Inc.: Accounting for Capitalism regulation.” On October 18, a European Council meeting (2006) and coeditor of Transatlantic Challenges in an Era of Growing of the European Union’s 27 heads of state and government Multipolarity (2012). -
On the Meaning and Future of the European Monetary System
ESSAYS IN INTERNATIONAL FINANCE No. 138, September 1980 ON THE MEANING AND FUTURE OF THE EUROPEAN MONETARY SYSTEM TOM DE VRIES INTERNATIONAL FINANCE 'SECTION DEPARTMENT OF ECONOMICS PRINCETON UNIVERSITY Princeton, New Jersey This is the one hundred and thirty-eighth number in the series ESSAYS IN INTERNATIONAL FINANcE, published from time to time by the International Finance Section of the Department of Economics of Princeton University. The author, Tom de Vries, is an Alternate Member of the Executive Board of the International Monetary Fund and teaches international monetary relations at the School of Ad- vanced International Studies, Johns Hopkins University. After service at the Netherlands' Central Bank, he was from 1964 through 1968 Director for Monetary Affairs of the European Economic Community and a member of its Mone- tary Committee. He has published widely on monetary questions. In this Essay, his second contribution to the series, he expresses his personal views only. The Section sponsors the Essays in this series but takes no further responsibility for the opinions expressed in them. The writers are free to develop their topics as they wish. PETER B. KENEN, Director International Finance Section ESSAYS IN INTERNATIONAL FINANCE No. 138, September 1980 ON THE MEANING AND FUTURE OF THE EUROPEAN MONETARY SYSTEM TOM DE VRIES INTERNATIONAL FINANCE SECTION DEPARTMENT OF ECONOMICS PRINCETON UNIVERSITY Princeton, New Jersey INTERNATIONAL FINANCE SECTION EDITORIAL STAFF Peter B. Kenen, Director Ellen Seiler, Editor Susan Ciotti, Editorial Aide Kaeti Isaila, Subscriptions and Orders Library of Congress Cataloging in Publication Data Vries, Tom de. On the meaning and future of the European monetary system. -
Key Issues on European Banking Union Trade-Offs and Some Recommendations
GLOBAL ECONOMY & DEVELOPMENT WORKING PAPER 52 | NOVEMBER 2012 Global Economy and Development at BROOKINGS KEY ISSUES ON EUROPEAN BANKING UNION TRADE-OFFS AND SOME RECOMMENDATIONS Douglas J. Elliott Global Economy and Development at BROOKINGS Douglas J. Elliott is a fellow in the Economic Studies program at the Brookings Institution and a member of the Brookings Initiative on Business and Public Policy. This paper was prepared within the framework of “The Future of Europe and the Eurozone” research project conducted by the Brookings Global Economy and Development program. Support from the Stavros Niarchos Foundation, New York and ESADE in Barcelona is gratefully acknowledged.* Acknowledgements: I would like to gratefully acknowledge the support of Kemal Derviş and the Global Economy and Development program at the Brookings Institution. Kemal suggested the paper and provided the funding and considerable en- couragement, as well as helpful suggestions. Many others have provided useful comments along the way, includ- ing: Domenico Lombardi, Carlo Bastasin, Martin Baily, Nicolas Veron, Guntram Wolff, and a number of officials and others who would prefer to remain anonymous. Justin Vaisse, Antonia Doncheva, Galip Kemal Ozan, Annick Ducher, and Mao-Lin Shen went still further and assisted with excellent editing comments. In all cases, the opin- ions, and any errors, remain my own. * Brookings recognizes that the value it provides is in its absolute commitment to quality, independence and im- pact. Activities supported by its donors reflect this commitment and the analysis and recommendations are not determined or influenced by any donation. CONTENTS Overview ..............................................................................1 Background ...........................................................................6 What is a “banking union”? ..........................................................6 Why is Europe considering it? .......................................................6 How does a banking union intersect with moves to a fiscal union?.