Brussels, 24/10/2008 (Agence Europe) - At a time when the idea of an overhaul of economic governance in the form of a 'parallel' chairing of Eurogroup by a head of state is being discussed, MEPs are examining other tangible, ambitious, measures to improve coordination of eurozone policies. On the fringes of the plenary in Strasbourg on Monday 20 October 2008, the European Parliament's Economic and Monetary Affairs Committee adopted a report by Pervenche Beres (PES, France) and Werner Langen (EPP-ED, Germany) on the European Commission's report on the first ten years of Economic and Monetary Union (UEM@10, see EUROPE 9656 and 9657). MEPs will debate the report in plenary on 17 November 2008 and vote on its on 18 November.
The MEPs share the view that 'the single currency has become a symbol of Europe' and has 'brought stability and fostered economic integration in the euro area,' regretting that 'internal economic divergences have not yet diminished as expected and productivity has not developed satisfactorily in all parts of the euro area.' They point out that 'the increasing use of the euro as an international trading currency is benefitting al the eurozone members' but 'more needs to be done to reap the full benefits of EMU, such as enabling Member States and regions with below-average GDP to catch up, and to strengthen citizens' understanding and commitment to the single currency'.
The MEPs believe that 'streamlined and more coherence, multi-supportive economic reforms coordinated in a timely fashion on the basis of the Integrated Policy Guidelines and policy-mix approach of the Lisbon Strategy could decrease economic divergences.' The MEPs stress 'the need to improve and simplify the procedures and methodologies for revision and assessment of the implementation of those guidelines at the end of each year.' The MEPs explain that 'the revised Stability and Growth Pact (SGP) has proven its value' and 'the main elements of the SGP must also be consistently adhered to in the future' (the 3% criterion and the 60% maximum national debt criterion). The MEPs urge eurozone countries to step up effective coordination of their economic and financial policies by drawing up a coherent common strategy at Eurogroup, involving coordination of timetables for the budget procedures and draft budgets based on common hypotheses on economic developments and future euro-US dollar exchange rates.
The MEPs recall 'their strong commitment to the independence of the ECB' (European Central Bank) but expect 'an improvement of the monetary dialogue on several points, such as coordinating the dates for the regular hearings of the ECB President (Jean-Claude Trichet, Ed.) with the ECB's calendar for monetary policy decisions'. They suggest that 'the ECB should move towards a direct inflation targeting regime where a point inflation target is supplemented by a range of permitted fluctuations around the target rate' and 'possible improvements in the procedure for appointing the members of the ECB's executive board before 2010.'
The MEPs' draft report 'deems a Europeanisation of the financial supervision structure… to be necessary in the medium-term' and 'any role for the ECB in terms of supervision should be extended beyond the borders of the euro area via the European System of Central Banks'. As the world's largest economic area, the EU 'should play a leading role at international level in terms of reforming the regulatory system for financial services' and the Commission should 'examine the creation of European bonds and develop a long-term strategy which enables the issuing of such bonds within the euro area, in addition to Member States' national bonds'.
The MEPs believe that the 'Member States outside the euro area that fulfil the Maastricht criteria and have no derogation in the Treaty should adopt the common currency at the earliest possible opportunity'. They consider 'that the single currency remains a communication priority for the European Union,' calling for greater efforts in view of the inflation level for citizens, which is higher than the official inflation levels. Given the euro's growing international role, 'with a share of 25% of global foreign exchange reserves… and its important role as a financing currency,' the MEPs call for an assessment of the implication of use of the euro outside the eurozone, stressing that it will not be possible for countries that are not members of the EU to join the euro. The report calls for better coordination of European views at international financial institutions.
On the question of economic governance, the report makes several suggestions for beefing up existing instruments, for example introducing the consultation of national parliaments over Stability and Convergence Programmes and National Reform Programmes; publishing Stability and Convergence Programmes and National Reform Programmes at the same time (at the beginning of autumn) after a debate in the national parliament; The BEPG could include common budget targets in lien with the preventative arm of the SGP; harmonising the different national fiscal calendars and the main assumptions used in the underlying forecasts; using more formal recommendations for eurozone Member States, setting targets for medium-term expenditure, specific structural reforms, investment and public finance quality objectives); a binding framework for eurozone countries to consult with one another and the Commission before taking major economic policy decisions; 'Eurogroup formations' should be established in the field of competitiveness/industry, the environment, employment and education; grater human resources for Eurogroup; the Economic Policy Committee should be absorbed into the Economic and Financial Committee; and a European Parliament representative should be given observer status on Eurogroup and informal Council meetings. The MEPs call 'upon national governments, under the leadership of the President of Eurogroup, to support economic activity in a joint way, at the same moment and in the same direction.' (A.B. trans fl)