Chapter 9: Converging to crisis and austerity
The fiscal rules relating to excessive deficits and associated fines were to become binding in Stage III. Chapter 4 of the Maastricht Treaty dealt with the ‘transitional provisions’ governing the move to full economic and monetary union. After the first stage commenced on 1 January 1990 it was intended that the liberalisation of capital would be accomplished before the Treaty was signed. This process had not been completed by the time the Treaty was signed in February 1992 and Article 73b required this to be achieved before the second stage would begin on 1 January 1994. Further, any nations still allowing their central banks to provide overdraft facilities or purchase treasury debt (and there were several) had to curtail this practice before Stage II was to begin. Article 109E also required Member States to ‘avoid excessive government deficits’ (Maastricht Treaty 1992: 18) as preparation for Stage II. The onset of Stage II would also see the coordination of European monetary policy, previously ‘managed’ by the Committee of Governors of the Central Banks, devolved to the newly created EMI. The EMI would prepare for the introduction of the common currency (including its design and name) and the absorption of the individual Member State central banks into the ECB system. None of this work was particularly transparent to the citizens of Europe.
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