The (Ever) Incomplete Story of Economic and Monetary Union

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This article applies the governance typology used in this special issue to the evolution of euro area governance. The article begins with a description of Economic and Monetary Union’s original governance structure, with third order governance (shared norms) present in varying degrees in monetary, financial and fiscal governance. While a shared consensus on the importance of an independent central bank to pursue price stability allowed for the creation of the European Central Bank, euro area governance was otherwise limited to the coordination of national policies. Since the crisis, shifting norms (third order governance) allowed for the creation of new bodies (e.g. the European Stability Mechanism and the Single Supervisory Mechanism) and the expansion of the powers of existing institutions (particularly the ECB). In areas where no normative changes occurred (fiscal and economic policy coordination), second order governance has been marked by incremental changes to existing institutions. The degree to which economic governance has become more hierarchical depends both on the strength of third order governance norms and the preferences of large states like Germany either to retain their own sovereignty or create additional rules that bind member states.