Brussels, 28/11/2013 (Agence Europe) - On Wednesday 28 November, the European Commission published a roadmap on how to boost economic and monetary union (EMU). Commission President José Manuel Barroso said the EMU was still facing important challenges despite recent initiatives that he welcomed, like agreement on Monday by the eurozone on sustainability of the Greek debt (see EUROPE 10739). The roadmap would be accompanied by other measures, he said, warning that the eurozone is irreversible.
Barroso said the Commission's document identifies weaknesses and draws up a map of necessary measures, some of which can be introduced under existing secondary legislation, while others will require changes to the EU treaty.
Banking Union. The Commission expects at least five years to pass before banking union is complete. As Internal Market Commissioner Michel Barnier has explained, banking union will be “revolutionary” and will take a three-pronged approach with the common bank supervision system; a dispute resolution authority; and a common savings guarantee system. Barroso pointed out that the three aspects would be introduced one at a time.
Despite the tough but determined talks between the European Parliament and the Council of Ministers, the Commission hopes it will be possible to reach agreement this year on the bank supervision system. It all depends on the political will in the member states, but there is nothing on the table that cannot be ironed out, said Barroso, adding that in 2013, the Commission will suggest setting up a dispute settlement authority to ensure that banks pay for banks rather than expecting the taxpayer to shell out. This second aspect will be prepared under existing treaties. Barnier said that financial regulations were also being introduced one by one and he welcomed the agreement reached on Tuesday evening on reform of credit rating agencies (see related article).
On a common system guarantee system, Barnier took note that some member states (but not all) already have their own system in place. It would not be possible to mix or combine these systems until all member states have one of their own, so the Commission is recommending that the remaining countries set up a savings guarantee scheme. Barnier warned that this aspect of EMU would not be ignored and hoped agreement could be reached on the first two areas in the spring of next year.
Budget Union. The key word on budget union for the European Commission is greater integration. It says budget union will be ready in five years time. The important thing in the medium-term (eighteen months to five years) was to improve the common pursuit of budget policies, Barroso explained, because only a stricter governance system would make it possible to introduce a full Budget Union. The first stage is to create a competitiveness and convergence fund for the eurozone, which could then give rise to a genuine fiscal capacity for the eurozone itself. To this end, the Commission plans to publish proposals over the next eighteen months (in order to respond to the mandate given to it by the European Parliament) but the treaties will have to be altered to set up a genuine budget union and treaty changes will not be possible under the EU institutions' present term of office. The Commission expects the next European elections to provide an opportunity to launch a debate on budget union.
In terms of the pooling of debt, it will be necessary to wait until 2014 at the earliest, because the current treaties do not allow such a thing to be set up. A total pooling is not on the cards, with only a partial pooling of debt and 'eurobills' (bonds maturing in less than a year) included on the Commission's roadmap. Both these types of pooling would require changes to the treaty.
From Seventeen to Twenty-five. Barroso said he respected the decisions of the countries that had opted out of the euro (the UK, Denmark and Sweden), but the single currency was the currency of the European Union rather than simply the currency of a group of countries, and the objective was to speak with one voice. Economic and Monetary Affairs Commissioner Olli Rehn stressed this aspect, saying that the external representation of the eurozone had to be enhanced and consolidated and it had to deliver a single message in all the multilateral economic institutions. The Commission wants the eurozone to have its own seat at the International Monetary Fund. Improving the image of the eurozone around the world is part of the Commission's roadmap for the short term.
It is important to have a long-term vision in mind when all these measures are introduced, explained Barroso, meaning that the eurozone must have the ability to absorb new members and new policies faster and more deeply than the European Union, while preserving the EU27 policies, particularly the single market. The eurozone must take an open, inclusive approach.
Finally, the Commission called for the rapid introduction of the European Semester system and the six-pack of financial legislation, agreement on the two-pack and respect of the stability and growth pact.
Last but not least, the roadmap encourages member states to agree rapidly on the Multiannual Financial Framework (budget for 2014-2020), which the recent summit failed to do (see EUROPE 10737). (EL/transl.fl)