Table of Contents

Structural Challenges for Europe

Structural Challenges for Europe

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

The main thrust of the book is that the sharing of mutual experiences is important for generating an acceptable policy mix, both at EU and national levels. The contributors highlight key financial issues, including the role of FDI and of foreign banks in the still ‘under-banked’ acceding countries, the re-launch of social security systems and the fiscal challenges of financing the catch-up process. They also examine the ongoing EU debate surrounding the application of the Stability and Growth Pact in Central and Eastern European Countries (CEECs) and go on to explore the contrasting evidence that some CEECs have shown more extensive privatisation efforts than some EU countries.

Chapter 26: Introductory remarks: the keys to a successful future of EMU

Gert Jan Hogeweg

Subjects: economics and finance, money and banking

Extract

Gert Jan Hogeweg There are four highly complementary elements that are essential to the successful further development of EMU. First, the continued safeguarding of, and strict compliance with, the institutional framework laid down in the Treaty. Second, a high degree of political consensus on the price stability objective. Third, a sustained improvement in the characteristics of the euro area, particularly in terms of flexibility and adaptability. And fourth, the achievement of an orderly EMU enlargement process. The continued safeguarding of, and strict compliance with, the institutional framework laid down in the Treaty includes the objective of price stability and the independence of the ECB, both of which could be strengthened by being enshrined in a constitutional treaty. However, the ECB is rather concerned about compliance with the fiscal rules in the Treaty and the Stability and Growth Pact at the current juncture. Compliance is crucial if confidence in the institutional and economic future of the euro area is to be maintained. The safeguarding of our monetary and fiscal ‘institutional framework’ is not per se sufficient to ensure the successful enlargement and further consolidation of EMU. To achieve this, the other elements are also essential, one of which is an ever-increasing degree of political consensus among the public on the culture of price stability. Another element is a sustained improvement in the characteristics of the euro area, in terms of substantially greater flexibility and adaptability to shocks, and a stronger and more sustainable growth rate of potential output. Such...

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