Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

centralised decision-maker. Similarly, the new European Supervisory
Authorities may risk yielding only incremental improvements compared
to the functioning of the existing Lamfalussy Committees, although they
also have the potential to develop into effective, if at that stage embryonic,
EU-level regulators and supervisors.
Being inside the euro area is an insurance policy
Third, the single currency has shown its ability to shield the economies
and financial systems of the participating countries from the storms
of the financial crisis. This has raised the attractiveness of euro area
membership for a number of countries still outside the single currency
zone. 24 The option of “staying out” revealed its inherent economic costs,
which became tangible and measurable in terms of higher interest rates,
more elevated risk premia, or exchange rate volatility. As these concrete
costs of “splendid isolation” start to show-up in monetary terms, they
seem to be accelerating a rethink of euro area entry not only in Denmark
but also in other non-euro area EU countries.
A case in point is the complete turnaround of Icelandic opinion on EU and
euro area membership and that country’s recent formal application for
EU membership. The realisation that the combination of “small country,
small currency, big financial sector, small fiscal firepower” (such as the
cases of Iceland, and to a certain extent, also Britain) is unsustainable 25 is
likely to find its way into public debate and policymaking. In other words,
when the sea gets rough, it is better to be on a big boat than a small vessel.
Thus, “more Europe” in the sense of wider coverage of complete monetary
integration is likely. Therefore, in the medium to longer-term context, the
distinction between euro-ins and -outs is likely to become increasingly
obsolete. For instance, the debate as to whether any institutional innovation
– such as the new framework for financial supervision (ESFS/ESRB) –
should be exclusively geared towards the needs of, and apply to, euro area
countries, might be pressing, for reasons of political advantage in the
immediate future, but, in a longer-term perspective, it is a temporary one.
Within the coming decade, it can be expected that almost all current (and
some future) EU member states will have joined the euro area, leaving the
United Kingdom and a small number of countries outside.
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After the crisis: A new socio-economic settlement for the EU