Conceptual Foundations of Economic and Monetary Union

Europe’s economic and monetary union is a work in progress. This chapter sketches the direction that further progress should take. Key steps include building on the precedent of the Recovery Plan for Europe by further enlarging the EU’s borrowing capacity, developing revenue sources adequate for servicing and repaying EU debt, reforming and simplifying the EU’s fiscal rules, and creating a fully funded union-wide deposit insurance scheme. In addition, progress will require supplementing the numerical rules and reference values of the Stability and Growth Pact with independent policy-making institutions at the national level. This will provide a superior basis for the operation of the euro area’s policy process.