Institutional Mechanisms for Regulating External Imbalances in the European Economic and Monetary Union

Abstract

The relevance of the research is driven by the need to reveal modern factors and specifics of structural financial imbalances typical for regional integrated associations by an example of the European Union and to assess new mechanisms for regulation of disparities and investment cooperation development in a region. The subject of the research is the factors, trends and consequences of the division of EU countries into creditors and debtors by parameters of external debt financing; structure and directions of cross-border financial flows; and net international investment position based on the analysis of statistics related to types, structure and scale of external imbalances in the euro area as well as to methods and institutional mechanisms for their regulation. The purposes of the research were to reveal the acuteness of external imbalances in the countries of the European Economic and Monetary Union (EMU) in the financial sphere as a factor of macroeconomic destabilization in the region and systematize measures for strengthening and development of various institutional mechanisms to level off the remaining structural imbalances and expand the channels of investment in the real economy as part of the project to create a sustainable renovated EMU in the period until 2025 It is concluded that new more developed forms of regional financial integration, including the creation of the Banking Union and the Union of Capital Markets, the European Monetary Fund and the European Fund for Strategic Investment, are strategically important as effective institutions for regulation of external financing imbalances and support of investment in the economic development.