Brussels, 23/07/2004 (Agence Europe) - The Directorate general of the Economic and Financial Affairs of the European Commission published a report on Tuesday on the first five years of the existence of the Economic and Monetary Union (EMU). This report shows a most satisfactory contribution of the euro to macro-economic stability and economic integration in Europe, but points to a number of areas within the euro zone where further work is required. In a press release, Joaquin Almunia, the Commissioner for Economic and Monetary Affairs, states that "five years on, Economic and Monetary Union represents a remarkable political and institutional achievement for the EU. The challenge is now to tackle the remaining causes of slow growth in the Union".
On the single currency policy which accompanied the introduction of the euro, tension on the exchange rate between the Member States, often in response to external factors, have been avoided and macro-economic stability globally ensured, states the report. The ECB has been able to implement a monetary policy with the goal of price stability, taking account of changing economic conditions, stress its authors. On budgetary matters, the current drifts are due to the slowing of growth, but are better contained than previously, whereas economic integration has speeded up, especially on the financial markets, and trade has developed between States in the zone. Given these factors, which are both positive and mitigated, the report prepares discussions of future reforms of the Stability Pact, presenting some desired future developments.
Accelerating structural reforms to support growth: macro-economic stability has not led to sustainable growth, and a radical change must come in now towards concrete actions, in order to reinforce the 'E' of EMU, notes the report. The essential structural reforms relate to the markets for products, services and labour.
Addressing the consequences of the ageing population: the report suggests that governments focus their efforts on debt reduction, increasing employment rates, and the reform of health and pension systems.
Making a success of enlargement: currently three of the new Member States have joined the Exchange Rate Mechanism (ERM II), and the others are likely to follow suit shortly. The report stresses the need to take account of the greatest economic diversity within the enlarged euro zone.
Reinforcing the framework of co-ordination of economic and budgetary policies: the Commission expects improved implementation of Member States' commitments at EU level.
The international role of the euro zone: the use of the euro as an international currency will depend largely on progress made on the previous points, states the report. But Europe's role within the international monetary and financial system is still not proportionate to its economic weight. A less incomplete and fragmented representation of the euro zone internationally is very much to be desired, the report concludes.