The evolution of economic governance in EMU

EMU’s unique economic governance structure was set up by the Maastricht Treaty to ensure the proper functioning of the economic and monetary union. A single monetary policy is entrusted with an independent central bank, a range of common policies is decided by the Council (notably the ECOFIN Council), and many other economic policies – notably fiscal and structural policies – remain in the hands of national actors. It was further shaped as events unfolded, priorities changed and new challenges emerged. This paper examines the benefits of coordination in a stylised manner and how these benefits have shaped the coordination framework in EMU. It then discusses in detail the coordination experience in four areas that are particularly important for the functioning of EMU: (i) fiscal policy coordination under the Stability and Growth Pact (SGP); (ii) the coordination of structural policies under the Lisbon Strategy for Growth and Jobs; (iii) the representation and coordination of euro-area positions in international financial fora; and (iv) the coordination of macroeconomic statistics. The thrust of the findings is that EMU’s system of economic governance has, overall, proven fit for purpose. The current policy assignment to the institutions and instruments that govern the conduct of economic policy in EMU is sound, even though further progress is necessary in several areas, particularly as regards external representation