The resilience of the Economic and Monetary Union is at the heart of current EU reform discussions. The recent proposal by the 14 French/German economists and the subsequent response has geared the discussion towards risk-sharing and risk-reduction. Reconciling risk sharing and market discipline is key and the French/German proposal provides concrete measures for improving EMU resilience.
The issue of economic convergence is, however, a long term problem that needs further addressing in EMU reform discussions. Therefore, this Report discusses the need of economic convergence, a specific focus on the type of convergence. In doing so it argues that a revisiting on economic structures and institutions is essential in furthering the (long-term) resilience of the EMU. Proper indicators and benchmarks that not only focus on policy outcomes, but mainly on institutions would be a step forward, combined with relevant EU-level instruments. Despite decision time looming for euro reform, it is important to look at the foundations of EMU resilience.