Euro Area/Economic governance
Evolution of economic and financial governance in the Euro Area
The Minister for the Economy, Finance and Industry made a statement on the evolution of economic and financial governance in the Euro Area.
In the face of the major financial tension which has affected certain Member States in 2010, Europe has been able to show its determination to maintain the stability, integrity and unity of the Euro Area. In solidarity with those of its Member States exposed to liquidity crises, the European Union has, at the same time, undertaken a reform of its economic and financial governance, necessary to the balanced and sustainable operation of the economic union and the Euro Area.
The European Union, with the support of the International Monetary Fund (IMF), has shown its solidarity by mobilizing resources for Greece (€110 billion) and Ireland (€85 billion), in support of rigorous adjustment programmes by the European Commission and the IMF, in conjunction with the European Central Bank (ECB).
At the same time, in order to prevent a new liquidity crisis and structural imbalances, particularly in the area of competitivenesss, the European Union heads of State and government decided, at the European Council of 16 and 17 December 2010, to strengthen the economic governance of the Economic and Monetary Union.
Firstly, they approved a proposal for a limited modification of Article 136 of the Treaty aimed at enabling a European stability mechanism for the Euro Area Member States to be established. This permanent financial safety net will, from June 2013 onwards, replace the European Financial Stability Facility set up in May 2010 for a three-year period. The assistance provided by this mechanism will be part of a rigorous adjustment programme established and monitored by the IMF and the European Commission, in conjunction with the ECB. The private sector will participate on a case-by-case basis, not automatically, in accordance with the practice followed by the IMF.
Secondly, they pledged to adopt, by June 2011, the texts on the deepening of European economic governance, which call for budgetary oversight to be strengthened, supervision of macro-economic imbalances between the European Union countries to be established and minimal common rules on national budgetary frameworks to be created.
The application of these texts will broaden and strengthen economic supervision and the coordination of European economic policies, which will henceforth be able to play a greater preventive role, in accordance with France’s wishes.
This new structure completes the institutional architecture of Economic and Monetary Union and fills the gaps highlighted by the crisis. It consolidates the benefits of the euro’s establishment for all the European economies and the role of the single currency in the international monetary system. (…) ./.