Economic convergence as the cornerstone of EMU resilience
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.