This is on a highly topical issue and addresses a key policy issue for Europe—namely, reinforcing EMU institutional architecture along with the Banking Union. Some proposals have emerged in Europe, and it will be important to put out staff views on this issue. In that context, publication as an SDN is appropriate, given the high profile nature and relevance of the topic—much like the Banking Union paper done a few months ago.

The paper makes an analytical contribution to the revived discussion about the euro area’s institutional setup. After significant progress during the euro crisis, the drive to complete Europe’s Economic and Monetary Union (EMU) had stalled, and the way forward will benefit from an in-depth look at the conceptual issues raised by the evolution and architecture of Europe, and the tradeoffs involved. A thorough look at the underlying economic issues suggests that in the long run, EMU will benefit from progressing along three mutually supporting tracks: introduce more fiscal risk sharing, helping to make the sovereign “no bailout” rule credible; complementary financial sector reforms to delink sovereigns and banks; and more effective rules to discourage moral hazard. This evolution would ensure that financial markets provide incentives for fiscal discipline. Introducing more fiscal union comes with myriad legal, technical, operational, and political problems, raising questions well beyond the remit of economics. But without decisive progress to foster fiscal risk sharing, EMU will continue to face existential risks.

Does the European Union need closer fiscal integration, and in particular a stronger fiscal centre, to become more resilient to economic shocks? This book looks at the experience of 13 federal states to help inform the heated debate on this issue. It analyses in detail their practices in devolving responsibilities from the subnational to the central level, compares them to those of the European Union, and draws lessons for a possible future fiscal union in Europe. More specifically, this book tries to answer three sets of questions: What is the role of centralized fiscal policies in federations, and hence the size, features and functions of the central budget? What institutional arrangements are used to coordinate fiscal policy between the federal and subnational levels? What are the links between federal and subnational debt, and how have subnational financing crises been handled, when they occurred? These policy questions are critical in many federations, and central to the current discussions about future paths for the European Union. This book brings to the table new, practical insights through a systematic and comprehensive comparison of the EU fiscal framework with that of federal states. It also departs from the decentralization perspective that has been prominent in the literature by focusing on the role of the centre (which responsibilities are centralized at the federal level and how they are handled, rather than which functions belong to the local level). Such an approach is particularly relevant for the European Union, where a fiscal union would imply granting new powers to the centre.

In the wake of the euro crisis, the European Union has been transformed in many ways. Is it now on the right track? The euro crisis, the steps taken to manage it, and the resulting transformations have triggered a necessary process of reconsidering economic governance in the European Union. This volume— the third in a series of annual editions tackling different aspects of governance— examines the long list of open political, legal, and economic questions related to the functioning and fundamental structure of the Union as a whole and the economic and monetary union in particular. Organised in three main sections, the contributions to this collection bring the perspectives of different academic disciplines to bear on the functional aspects of economic governance, the institutional transformations that have taken place, and their implications for the Union's legitimacy. A separate chapter looks at inequalities in perceptions of economic conditions and well-being within the European Union to identify trends particularly during the eurozone crisis. In doing so, the chapters in this volume take stock of the current situation, shed light on the dilemmas and challenges that must be recognised and addressed, and explore various options for the way ahead. The collection's ultimate goal is to assess whether the recent transformations lead EU governance in the right direction or require further adjustment.

Presenting a sweeping analysis of the legal foundations, institutions, and substantive legal issues in EU monetary integration, The EU Law of Economic and Monetary Union serves as an authoritative reference on the legal framework of European economic and monetary union. The book opens by setting out the broader contexts for the European project - historical, economic, political, and regarding the international framework. It goes on to examine the constitutional architecture of EMU; the main institutions and their legal powers; the core legal provisions of monetary and economic union; and the relationship of EMU with EU financial market and banking regulation. The concluding section analyses the current EMU crisis and the main avenues of future reform.

This book explores the role of national fiscal policies in a selected group of Euro-area countries under the European Economic and Monetary Union (EMU). In particular, the authors characterize the response of output to fiscal consolidations and expansions in the small Euro-area open economies affected by high public and private debt. It is shown that the macroeconomic outcome of fiscal shocks is strongly related to debt levels. The Euro-area countries included in the investigation are Greece, Ireland, Italy, the Netherlands, Spain, and Portugal, over the sample period 1999–2016, i.e., the EMU period. The main econometric tools used in this research are structural vector autoregressive (VAR) models, including panel VAR models. The available literature relating to the subject is also fully reviewed. A further closely investigated topic is the potential spillover effects of German fiscal policies on the selected small Euro-area economies. Moreover, in the perspective of the evolution of the Euro Area towards a full Monetary and Fiscal Union, the authors study the effects of area-wide government spending shocks on aggregate output and other macroeconomic variables during the EMU period. The closing chapter of the book considers evidence on the consequences of austerity policies for European labour markets during recent years.

This book provides a much-needed detailed analysis of the evolution of Europe over the last decade, as well as a discussion about the path of reform that has been trodden in the aftermath of the financial crisis. It offers a multidisciplinary view of the E(M)U and captures the main factors that induced the reform of the monetary union – a process that has not been linear and is far from being concluded. The author examines the policy responses designed throughout the development of the crisis and assesses the scale of the crisis in Europe, in comparison to other parts of the world, as well as its prolonged effects both in economic and financial terms. An update on the current ‘state of the art’ in the conception of risk-sharing mechanisms is provided. With its innovative approach, the book analyses the financing issues which need to be taken into consideration in the design of these instruments and highlights the main categories of governmental risk-sharing mechanisms – in particular, the ones to be used as ‘fiscal capacity’. This is a timely and topical book and will be of interest to a broad audience, including experts, scholars and students of European affairs, particularly those with economic, financial, legal and political science backgrounds.

Among member states, many structural weaknesses were exposed when economic performance declined significantly and financial markets became more discerning. This book focuses on the analytical underpinnings of real-time policy advice given to euro area policymakers during four cycles of the IMF’s annual Article IV consultations (2012–15) with euro area authorities.

In theory, regionalism and globalization are intended to be viewed as two separate concepts. However, as long as the approaches complement each other, considering these paradigms in tandem can have significantly positive effects on the overall status of the world economy. Regional Economy Integration and the Global Financial System addresses recent trends in regional integration projects and the strides that such projects are making on the road toward globalization. Focusing on a range of economic projects, emerging supranational units, and possible implications for future trends, this book is an essential reference source for professionals, scholars, and institutions interested in the dynamic effects of regionalism and globalization.

Since the outbreak of the 2008 financial crisis, European Union (EU) institutions and Member States have engaged in a major effort to repair the architecture of economic governance of the European Economic and Monetary Union (EMU). This book takes as its starting point the unclear notion of financial stability, which only recently has received a more detailed legal analysis. It examines the evolution of the concept of financial stability during the financial crisis and provides a conceptual framework in order to demonstrate that financial stability has become a foundational objective in Europe and has set a new normative framework in EU law and policy. Arguing that financial stability is a foundational objective in EU law and policy based on certain normative instruments, this ground-breaking book provides an in-depth and original understanding of the newly developed framework to attain supranational financial stability. In its analysis of the legal implications of these new instruments, the study examines topics and issues such as the following: - the concept and normative instruments of financial stability at European level; - the renewed economic governance in Europe; - the financial assistance mechanisms developed in Europe; - the new regulatory environment for banks at European level; - the Single Supervisory Mechanism and the role of the European Central Bank (ECB) therein; and - the new framework for banking resolution, with specific focus on the Single Resolution Mechanism. The author shows in detail how an appropriate level of supranational regulation, supervision, burden-sharing and rescue measures strengthen financial stability. Thereby, the book will appeal to officials in EU institutions and agencies as well as lawyers and academics in EU law and in banking/financial law to gain a clear understanding of role of financial stability and its normative instruments in EU law and policy. Gianni Lo Schiavo is currently working as a lawyer at the ECB. He obtained a PhD in EU Law at King's College, London, and has written numerous articles and chapters in EU administrative law, EU financial/banking law and EU competition law.