The Future of the Economic and Monetary Union

This publication featured as SIEPS 2018:1op by the Swedish Institute for European Policy (SIEPS) in June 2018

In the spring of 2010 a sovereign debt crisis erupted in the euro area that triggered a series of new crises and a reform process to fix what was broken in the Economic and Monetary Union (EMU). While member states’ experiences differ, the crises were essentially the result of a rapid unwinding of imbalances that had been built up in the 2000s. What made matters worse was the absence of institutions that could have prevented the crises from occurring, or at least mitigate the effects once they were a reality.

Several measures were implemented as a response to the insights gained from the crises, which can be broadly summarised in three categories: intergovernmental rescue funds, the strengthening of economic governance in the EMU and establishing two out of three pillars in the Banking Union. While there is general agreement that further reform is needed, there is however disagreement as to which measures should be implemented. In a nutshell, member states disagree over the balance between risk sharing and risk reduction. Risk reduction proponents place the emphasis on crisis prevention, while those who emphasise risk sharing focus on crisis mitigation.

This report represents a concerted effort by four prominent scholars from France, Germany, Italy and the Netherlands to summarise the discussion in those countries and analyse in which areas the member states may find common ground to press ahead with reforms. The authors have been asked to provide a background to how the euro has been perceived in their respective countries and identify which EMU reforms would be acceptable in the short- to medium-term perspective. Clingendael's Coordinator Europe Adriaan Schout elaborates on the role and perspectives regarding the Netherlands.