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

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factors will remain prevalent and become increasingly pressing. It is this assessment which informs the answer to the concluding question: on balance, which set among the above 12 factors are likely to have a greater impact on the future development of economic governance in the euro area and the EU? “More Europe” in practice: ad hoc intergovernmental cooperation or institutionalised deeper integration? Developments in the financial markets and the real economy over the past months suggest that the demand for coordinated economic policy action at EU or euro area level is likely to remain a persistent pressure. In other words, the centripetal forces in European integration are alive and their dynamics will push in the direction of more integration outcomes. Even if the supply side presents more question marks – and certain centrifugal forces, for instance, in relation with the preservation of the level-playing field in the internal market are clearly discernable – there are reasons to believe that supply will eventually catch up, not least for functional reasons. The evolution of integration outcomes is likely to manifest itself in two dimensions, notably the well-known categories of deepening and/or widening of integration. Specifically, the financial crisis is set to have a lasting effect on the content of the euro area governance framework (in terms of deepened, institutionalised integration in specific policy fields such as financial supervision, or changes in the decision-making processes). At the same time, the crisis is set to have an effect on the widening of the scope of deeper monetary integration, that is, the membership of the euro area. In one word, “more Europe”, and not just in economic governance, is likely because: Dealing with the new “inconsistent trio” is a structural necessity First, financial integration in the EU and in the euro area in particular, has created a new (functional) “trilemma”. 21 Integrated financial markets in the EU/euro area, a stable area-wide financial system and maintaining national tools and competences for supervision and crisis management and resolution, are mutually incompatible. Attaining all three objectives simultaneously seems impossible, as the current crisis has amply manifested: whenever national measures attempt to restore financial stability, they risk re-fragmenting the common financial market; integrating financial systems at European level without concomitant Europeanisation of supervisory and crisis management tools risks financial instability; and 58 After the crisis: A new socio-economic settlement for the EU
the stability of a truly integrated European financial system cannot be safeguarded as long as supervision and crisis management is fragmented along national lines. This “inconsistent trio” is structural – it is here to stay – and its resolution will require “more Europe”, lest the benefits of stable and integrated financial markets will be reneged. In fact, the increasing inadequacy of existing arrangements and the underlying centripetal dynamics at work are already evident when looking at the evolution of the EU financial regulatory and supervisory framework over the past years: from little or no cooperation among national authorities at the beginning of the millennium, to the Lamfalussy procedures and Level-3 Committees 22 set up in 2003, which essentially served as consensus-driven discussion fora to the 2009 Commission proposals turning these Committees into European Supervisory Authorities within an European System of Financial Supervision. Creating solid institutions is better than ad hoc arrangements Second, the argument in favour of structural, i.e. institutional, change (such as the ones to be introduced by the Lisbon treaty) has been reinforced. For instance, the crisis has revealed benefits of a more permanent EU presidency, especially with a view to the Czech presidency in the first half of 2009 which was anticipated with a certain degree of nervousness. The creation of the new financial crisis management cell, the agreed framework for more integrated European financial supervision to prevent future crises, all provide evidence that the status quo ante in economic governance is not perceived to be a viable option. Moreover, the Lisbon Treaty, once it enters into force, will offer further possibilities to reinforce economic governance both for the euro area and the EU as a whole. 23 A key question remains how these possibilities are used – for integration along the lines of intergovernmental cooperation or supranational centralisation. More specifically, this question also hangs over the coming institutional reinforcement of European financial supervision: what will be the precise nature of the new bodies? The new ESRB under the auspices of the ECB, for instance, could in practice turn out to be a cacophonous talking shop of parochial national interests; at the same time, the ESRB can be designed to have the potential to produce policy recommendations with real consequences by building on the supranational routines of the central bankers (who are also members of the ECB’s decision-making bodies) and by leveraging the reputation of the ECB as an effective Chapter 3 – Gabriel Glöckler 59
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Authors Iain Begg | Gabriel Glöckl
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Published in 2009 by Policy Network
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4 After the crisis: A new socio-eco
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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
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Page 44 and 45: initiatives vis-à-vis ratings agen
Page 48 and 49: Even if membership in a monetary un
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
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Page 58 and 59: in the EU show, authorities at the
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
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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
Page 98 and 99: Strengthening, if not really crafti
Page 100 and 101: incentives in the welfare schemes a
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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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128 After the crisis: A new socio-e
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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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