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