Download publication

Policy Contribution

The missing pieces of the euro architecture

What are the remaining fragilities of the Euro architecture? This policy contribution assesses the institutional reforms put in place during and after the crisis and make some proposals for a coherent economic governance framework to make Europe’s monetary union more resilient.

By: Date: October 26, 2017 Topic: European Macroeconomics & Governance

A version of this paper was prepared for the conference ‘20 years after the Asian Financial Crisis: Lessons, Challenges, Way Forward’, Tokyo, 13-14 April 2017, organised jointly by the Asian Development Bank and the Asian Development Bank Institute, and was published as ADBI Working Paper No. 778, September 2017, ‘How to build a resilient monetary union? Lessons from the Euro Crisis’. This version of the paper is published with the permission of the ADBI.

This policy contribution describes the institutional flaws of the single currency revealed by the euro crisis and the institutional reforms that were put in place during and in the aftermath the crisis, and evaluates the remaining fragilities of the architecture of the European monetary union.

In order to achieve a more resilient monetary union in Europe, we propose: 1) to form a ‘financing union’ through the completion of the banking union and the promotion of an ambitious capital markets union to provide private risk sharing between the countries of the monetary union; and 2) to improve the defective macroeconomic policy framework to avoid a repeat of the mistakes of recent years.

The latter involves: reforming the European Stability Mechanism / Outright Monetary Transactions framework to clarify its functions and improve its governance system, reforming the European fiscal rules to make them more effective to achieve the two desirable objectives of sustainability and stabilisation, and creating a small-scale euro-area stabilisation tool to provide public risk sharing in case of significant shocks that members of the monetary union cannot deal with alone and to help manage the euro-area aggregate fiscal stance. A promising option to carry out these tasks would be to establish a European Unemployment Insurance Scheme.

To ensure the democratic legitimacy of this overhauled euro-area governance framework, a European Fiscal Governing Council composed of six executive board members – including a euro-area finance minister – and of the finance ministers of the euro-area countries, would oversee the whole system and exercise the necessary discretion, while being accountable to the European Parliament in euro-area format.

View comments
Read about event More on this topic

Upcoming Event

Jun
25
08:30

How comprehensive is the EU political realignment?

Has the left-right divide become obsolete in EU politics?

Speakers: David Amiel, Otilia Dhand, Nicolas Véron and Silke Wettach Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article Download PDF More on this topic

Policy Brief

A strategic agenda for the new EU leadership

Memo to the presidents of the European Commission, Council and Parliament. 'A strategic agenda for the new EU leadership' by Maria Demertzis, André Sapir and Guntram Wolff is the first of our 2019 Bruegel memos to the new presidents of the European Commission, Council and Parliament. Focusing on the most important economic questions at EU level, these Bruegel memos are intended to be a strategic to-do list, outlining the state of affairs that will greet the new Commission.

By: Maria Demertzis, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: June 13, 2019
Read about event More on this topic

Past Event

Past Event

Past, present, and future EU trade policy: a conversation with Commissioner Malmström

What was trade policy during the last European Commission? What will be the future of European trade under the next Commission?

Speakers: Cecilia Malmström, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 13, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: A strategic agenda for the incoming EU presidents

In this Director’s Cut of ‘The Sound of Economics’, Bruegel’s Guntram Wolff and Maria Demertzis talk through their memo to the new presidents of the European Commission, Council and Parliament, outlining the specific measures that should be implemented in order to tackle the most formidable challenges arising in the next five years.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 12, 2019
Read article Download PDF More on this topic

External Publication

Effectiveness of cohesion policy: learning from the project characteristics that produce the best results

This study by Zsolt Darvas, Antoine Mathieu Collin, Jan Mazza, and Catarina Midões analyses the characteristics of cohesion policy projects that can contribute to successful outcomes. Their analysis is based on a literature survey, an econometric analysis and interviews with stakeholders. About two dozen project characteristics are considered, and their association with economic growth is studied using a novel methodology. Based on the findings, the study concludes with recommendations for cohesion policy reform.

By: Zsolt Darvas, Antoine Mathieu Collin, Jan Mazza and Catarina Midoes Topic: European Macroeconomics & Governance Date: June 11, 2019
Read article More on this topic More by this author

Podcast

Podcast

Deep Focus: Striving for research excellence with Horizon Europe

In this episode of 'The Sound of Economics', Reinhilde Veugelers speaks about her recent Bruegel paper, requested by the European Parliament, on using public resources to improve the EU's potential to be a global centre of excellence for research in the next decade.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 4, 2019
Read article More on this topic More by this author

Blog Post

European Parliament election results: The long view

Following the latest European elections, the author updates his previous analysis of trends in the share of European Parliament seats among ‘mainstream’ and ‘non-mainstream’ parties.

By: Nicolas Véron Topic: European Macroeconomics & Governance Date: May 29, 2019
Read article More on this topic More by this author

Opinion

L’euro sans l’Europe : un projet incohérent

Jean Pisani-Ferry constate que tous les grands partis ne remettent plus en cause l’euro. Il souligne néanmoins que trois vulnérabilités – économique, politique et internationale – menacent la monnaie unique.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: May 28, 2019
Read article More on this topic More by this author

Blog Post

The next ECB president

On May 28th, EU heads of state and government will start the nomination process for the next ECB president. Leaving names of possible candidates aside, this review tries to isolate the arguments about what qualifications the new president should have and what challenges he or she is likely to face.

By: Konstantinos Efstathiou Topic: European Macroeconomics & Governance Date: May 27, 2019
Read article Download PDF More on this topic

Policy Contribution

How to improve European Union cohesion policy for the next decade

This policy contribution investigates the performance of the design, implementation and effectiveness of cohesion policy, the most evaluated EU tool for promoting economic convergence. By analysing the effects of cohesion policy on economic growth through reviewing literature, conducting empirical research by comparing regions, as well as considering attitudes and expectations collected through interviewing stakeholders, the authors provide reform recommendations.

By: Zsolt Darvas, Jan Mazza and Catarina Midoes Topic: European Macroeconomics & Governance Date: May 23, 2019
Read article More on this topic More by this author

Podcast

Podcast

Backstage: Key policy positions of the Spitzenkandidaten

Giuseppe Porcaro hosts Bruegel director Guntram Wolff and visiting fellow Rebecca Christie to reflect on the key policy positions taken by the candidates for the European Commission presidency, ahead of May's elections.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: May 21, 2019
Read about event More on this topic

Past Event

Past Event

Europe after Sibiu: Towards differentiated integration?

A comprehensive follow-up to the Informal European Council in Sibiu, Romania.

Speakers: Andrew Duff, John Erik Fossum, Paweł Karbownik and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 21, 2019
Load more posts