Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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Even if membership in a monetary union implies that the participating countries become part of a community with a shared destiny (“Schicksalsgemeinschaft”), and despite the fact that EMU has clearly been conceived as much as a political as an economic project, the existence of the euro per se has not led to a deeper political desire for further integration, or at least coordination of key management aspects of national economies at euro area or EU level. Applying the neo-functionalist explanation, further integration would happen “around” the euro, in the specific areas that are required to make the single currency function smoothly. For instance, there had to be common EU rules on the combating currency counterfeiting or the harmonisation of national provisions to prohibit monetary financing or the privileged access of public institutions to credit. In the neo-functionalist logic, other macroeconomic policies such as fiscal policy would have been the next policy fields in which integration would progress. Indeed, the Maastricht Treaty and its subsequent revisions laid the foundations for some forms of EU cooperation in economic policy, mainly in the form of “soft” coordination of national economic, structural and employment policies. A large literature exists on the pros and cons, the methods and procedures, and estimated economic and policy outcomes of greater fiscal coordination 2 or even some form of fiscal federalism in the euro area. 3 The underlying rationale for such propositions are mainly economic, notably the need to cope with the externalities created by the sharing of a single currency, the spill-over effects of domestic policy choices across national borders and the avoidance of potential free-riding behaviour. 4 In practice, macro-economic policy coordination has been limited to the more or less faithful observance of the rules of the Stability and Growth Pact (and its contested revision in 2005). Integrative progress has also been limited in other economic policies: the Lisbon strategy; the much talked-about Open Method of Coordination; the European Employment Pact/Cologne Strategy etc., all seem to have excited observers and academics more than the practitioners who are supposed to implement policies within those frameworks. One way of looking at this evolution of the economic policy framework is to conceptualise it in terms of the demand and supply factors for integration outcomes. 5 Without entering into detailed explanations about why economic governance in the euro area has not evolved further (this is done more extensively elsewhere), 6 the demand for integration outcomes 46 After the crisis: A new socio-economic settlement for the EU
was apparently not as compelling as anticipated by some and/or the supply was constrained by various political, institutional, economic and social factors. The one area where tangible progress in economic integration has been achieved is the financial markets. The functional explanation for this advance lies in the fact that the introduction of the single currency removes a key inefficiency in the functioning of financial markets in Europe: the need to deal with various national currencies. However, while the existence of a single currency may be a necessary condition of integrated financial markets, it is by no means a sufficient one. Indeed, as stressed in various reviews of the state of integration of financial markets in Europe, the integration progress is very uneven across the various segments of the market, with those segments that are closest to the single monetary policy – like the money markets – displaying the most advanced degree of integration. Private sector action that created facts on the ground (e.g. through cross-border banking mergers and acquisitions) and pressure on public policy have generated demand for further integration. On the supply side, an activist pro-integration stance from the European Commission and the ECB has driven progress towards deeper financial integration. The EU’s Financial Services Action Plan sought to address the existing obstacles to a truly integrated financial market in the EU. A surge in demand for EU policy action: the response to the financial crisis since summer 2007 The 2007-2009 financial crisis led, prima facie, to a step-change in the demand for integration outcomes, at least among euro area member states. 8 The stresses in the euro money market that occurred in August 2007 – by definition a fully integrated segment of the financial markets – meant that a supranational institution with a commensurate responsibility covering the entire currency zone, in this case the ECB, had to intervene to enable the continued fulfillment of its responsibilities, i.e. to ensure the orderly functioning of interbank money markets across the euro area, in order to guarantee the proper transmission of its monetary policy signal. This task is inherent in the ECB’s responsibility for the single monetary policy and its price stability mandate. Problems that emanated from specific financial institutions in certain euro area countries created spill-over effects in other countries due to the integrated nature of the euro money markets, engendering a policy response at the supranational level. In that sense, the functionalist logic drove the first public policy action in the course of the financial crisis. That said, at this stage, the market tensions had Chapter 3 – Gabriel Glöckler 47
Page 1 and 2: Authors Iain Begg | Gabriel Glöckl
Page 4 and 5: Published in 2009 by Policy Network
Page 6 and 7: 4 After the crisis: A new socio-eco
Page 8 and 9: 6 After the crisis: A new socio-eco
Page 10 and 11: Simona Milio is associate director
Page 12 and 13: Chapter 10 Simona Milio ...........
Page 14 and 15: Before the crash: the EU as a parti
Page 16 and 17: liberalisation. The City of London
Page 18 and 19: of the Financial Services Action Pl
Page 20 and 21: confidence and world trade, to whic
Page 22 and 23: following the ECJ’s controversial
Page 24 and 25: signals are in place to promote a n
Page 26 and 27: need to be constructed to create ac
Page 28 and 29: or indeed re-impose, what they rega
Page 30 and 31: Markets with rules The overall conc
Page 32 and 33: 30 After the crisis: A new socio-ec
Page 34 and 35: Target financial stability The EMU
Page 36 and 37: Belgium, the Netherlands and Luxemb
Page 38 and 39: mortgage banks and the insurance se
Page 40 and 41: financial market rules. The ESFS au
Page 42 and 43: prudential regulation - though only
Page 44 and 45: initiatives vis-à-vis ratings agen
Page 50 and 51: emained relatively contained to spe
Page 52 and 53: The second channel of functional sp
Page 54 and 55: But even so, the depth and intensit
Page 56 and 57: governance in the EU and the euro a
Page 58 and 59: in the EU show, authorities at the
Page 60 and 61: factors will remain prevalent and b
Page 62 and 63: centralised decision-maker. Similar
Page 66 and 67: (GNI), the interests of the member
Page 68 and 69: terms only very slowly and as a per
Page 70 and 71: policy proposal asks itself what th
Page 72 and 73: ensure that a ceiling is put on the
Page 74 and 75: Reform of EU expenditure Spending 4
Page 76 and 77: The medium-term financial framework
Page 78 and 79: unanimity. The need to obtain the c
Page 80 and 81: therefore, was weakening the Europe
Page 82 and 83: for the signing of the strict and d
Page 84 and 85: Since then, member states have name
Page 86 and 87: in the world monetary system. It al
Page 88 and 89: a Treaty that not only ignores trad
Page 92 and 93: Firstly, they should include policy
Page 94 and 95: emanate from demographic trends. Ho
Page 96 and 97: Furthermore, the Lisbon agenda may
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Strengthening, if not really crafti
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incentives in the welfare schemes a
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security, yet at a lower cost than
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102 After the crisis: A new socio-e
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asis only in the 1990s, and over th
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in an increasingly global age the
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So what kind of social role for the
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effective common policies in areas
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help by ensuring a thorough audit a
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irrespectively of benefit and costs
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to the European Innovation Scoreboa
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flexible labour regulation than cou
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to cope with change is germane to a
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average job tenure figures in the E
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(74), and road vehicles (78). On th
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Towards a less dogmatic approach Wh
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will be reinforced rather than cont
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Where do we come from? The EU agend
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However, so far the flexicurity app
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existing practices of wage subsidie
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minimum wage tend to have higher pr
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commitment for employment”, 18 un
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provisions for minority protection,
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eflected in the objective of the Li
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instruments have been criticised fo
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However, the countries’ planning
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ich developed country pre-occupatio
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emerging markets (indeed the rules
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Energy and carbon use depend on fou
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concentrate on the size of the cake
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esurgence of long-term unemployment
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22 Financial Services Authority (FS
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7 This idea is not new. The 1970 We
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33 Arpaia, Alfonso, Declan Costello
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9 See Garabiol-Furet, M.-D. (2006)
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Chapter 11 1 Victor, D.G. (2006)
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Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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