The future of the Economic and Monetary Union to 2025 and beyond: the need for convergence

Kaloyan Dimitrov Simeonov

doi:10.1177/1781685818805678

Kaloyan Dimitrov Simeonov

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https://doi.org/10.1177/1781685818805678

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Journal: European View	Publication Date: Oct 1, 2018
Citations: 1	License type: cc-by

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As set forth in the Maastricht Treaty, the objective of establishing the Economic and Monetary Union (EMU) was based mainly on the need to achieve nominal convergence. However, the global economic and financial crisis has since proved that the EMU architecture is not solid enough. Therefore, EU institutions and member states have developed and started to implement plans for the completion of the EMU. The main focus of these plans up to 2025 is on institutional and regulatory reform. However, more attention should be paid to other types of convergence: real convergence, social convergence, financial convergence, cyclical convergence and structural convergence. This would lead to sustainable and strong all-round convergence in the EMU. This article outlines recommendations for the completion and sustainable maintenance of the EMU, concentrating on social, financial and cyclical convergence.

Highlights

The architecture of the Economic and Monetary Union (EMU) was designed in relatively stable economic conditions
As the European Commission has recognised, achieving cyclical convergence is important for the EMU because following a single monetary policy is harder and possibly less effective when countries are at very different stages of the economic cycle
EMU reforms aim to complete the construction of the euro area, with the goal of establishing a more sustainable and resilient EMU by 2025

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The architecture of the Economic and Monetary Union (EMU) was designed in relatively stable economic conditions. These changes focus mainly on institutional and regulatory reforms.1 Some of the measures aim to achieve different types of sustainable convergence among the member states, including real, cyclical, structural, social and financial convergence. This article argues that attention should be paid to EMU institutional and regulatory reforms but, in order for the EMU to be sustainable to 2025 and beyond, to achieving real, social, financial, cyclical and structural convergence.

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