18.5.2016   

EN

Official Journal of the European Union

C 177/16

Rapporteur:

Mr Petr ZAHRADNÍK

1.1.

The main general conclusion is that if the euro area is to be more active, effective and visible in international financial institutions, it needs to step up its external representation. This will in turn strengthen its relative weight in international financial institutions and give it a more prominent position in international financial markets. The EESC expressed its views on this subject even before the European Commission published these documents (1).

1.2.

The EESC endorses the rationale behind the two documents discussed here, namely that, following a notable buttressing of euro area internal governance (especially between 2009 and 2014), it now makes sense to balance this by improving the area’s representation in the global economy. This would manifest a strengthening of the political pillar that guarantees a proper balance and harmony between internal cohesion and what the euro area needs to operate externally, also leading to a convergence in the economic policy models of the countries in it.

1.3.

The EESC also agrees with making strengthening the euro area’s external representation in the International Monetary Fund (IMF) the priority. There are a number of reasons for this, prime among them the IMF’s dominant role in global economic governance and economic policy, as well as its very real involvement in rescue packages for a number of EU Member States in recent years.

1.4.

At the same time, however, the EESC thinks the proposed improved external representation of the EU or the euro area is the first step in an entire process that will be followed by a similarly detailed scenario with respect to other relevant institutions — such as the Bank for International Settlements (BIS) or the OECD — that play a role in furthering the goals of a Banking Union and a Capital Markets Union. The EESC proposes that the European Commission, while sticking with the priority of strengthening the euro area’s external representation in the IMF, also draft scenarios for making stronger and more effective the links with other relevant international bodies, taking particular account of their remits.

1.5.

The EESC broadly agrees with the ultimate goal of a single chair at the IMF by 2025, as set out in the proposal for euro area external representation, and with the scenario to achieve this. It also supports the Commission’s call for the European Parliament and the Council to reach a consensus that will enable the latter to adopt a generally advantageous decision on the proposed approach.

1.6.

On this point the EESC also recommends clearly and explicitly defining, on the one hand, the roles of euro area external representation and, on the other, their dovetailing with those of the EU as a whole, with a view to preserving the integrity of the single market. The EESC thinks the proposed euro area representation in the IMF involves matters that in reality and in substance are not restricted to just the area itself, but are also extremely relevant to the whole of the EU and all its Member States. At the same time, the EESC endorses the idea that future enlargement of the euro area be taken on board in the process of its external representation. Such coordination may constitute an additional reason and grounds in assessing decisions on whether a Member State is adequately prepared for joining the euro area.

1.7.

The EESC agrees with the main elements of the three-phase scenario to gain a single chair at the IMF by 2025 and the transitional stages leading up to this. However, the corresponding political pressure must be marshalled to secure the timely fulfilment of obligations and commitments stemming from this for the Member States.

1.8.

The Committee also endorses the proposal to create a set-up that would lead to the post of a representative responsible for the interests of the euro area — mainly at the IMF, but also at all other relevant financial institutions in Brussels (making the SCIMF a full-fledged subcommittee of the Economic and Financial Committee). There should also be an entity to represent the common interest of the euro area in Washington, with explicit and real coordination also being established in relation to non-euro area Member States.

1.9.

The EESC anticipates that the proposed procedure will result in better and deeper coordination between Member States in the area of economic policy and its external dimensions and expects a corresponding coordination on this between the relevant EU institutions and bodies, also ensuring the utmost transparency.

1.10.

In the view of the EESC, both documents largely focus on procedural and organisational or legislative/legal aspects of the issue. It recommends including an economic analysis and a brief statement on the expected benefits and impact following its implementation.

1.11.

The Committee agrees with and supports the proposed practice of submitting regular reports, starting at the earliest in spring 2017, on progress in achieving a reinforced euro area external representation.

2.1.

This opinion summarises observations on two documents published on 21 October 2015 as part of a package of measures to complete the European Economic and Monetary Union (EMU). They deal with one of this package’s priorities: the external representation of the euro area. The package is designed as a system of interlocking and contingent steps, all of which are essential for achieving the desired objective in 2025.

2.2.

The underlying idea builds on existing proposals for setting up a deep and genuine EMU (November 2012) and has been further highlighted in the Five Presidents’ report of June 2015.

2.3.

The documents under discussion take it for granted that the IMF is the main institution in respect of which the euro area’s external representation should be strengthened.

2.4.

A euro area that had a single chair would also be able to speak to the IMF with one voice on matters where EU policies are to a large extent coordinated, namely economic and budgetary policy, macroeconomic surveillance, exchange rate policies and financial stability.

2.5.

The proposal in response to this state of affairs is for a more consistent and effective external euro area representation in the IMF based on a strategy to agree on a scenario as swiftly as possible and to implement it step by step. Three stages are proposed.

2.6.

The concept for strengthening the external representation of the euro area is to be implemented transparently and the relevant sections of the public informed through regular progress reports.

2.7.

The single euro area representation in the IMF as ultimately envisaged in 2025 is specified as follows in the legislative provisions of the proposal for a decision, COM(2015) 603 final:

2.8.

In the event of euro area expansion, the necessary changes will be made in coordination with non-member countries of the euro area and steps taken to tweak the single representation accordingly.

3.1.

The first document under discussion focuses mainly on procedural and organisational matters, with the second framing its substance into a bill. The two constitute an integral contribution to establishing the euro area’s political pillar and ensuring a balance between the area’s internal and external instruments. Having a single voice in the external representation of the euro area will reinforce its coordination and cohesion and help to foster the convergence of a whole raft of economic policies between its various members. To fulfil this vision and make it a reality more responsibility must be taken in the form of closer integration and the strengthening of institutions.

3.2.

The period from 2009 to 2014 witnessed the adoption of an unprecedented number of measures to coordinate EU economic policies. (These include the introduction of the cyclical European Semester process, changes to the rules of the Stability and Growth Pact, adoption of the six-pack and the two-pack, the Treaty on the Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact), the European Stability Mechanism (ESM), the Banking Union and the Capital Markets Union). Most of these were about supplying missing building blocks of the euro area or the adoption of short-term rescue measures to meet urgent economic and fiscal policy needs. After a considerable time, the package of measures published on 21 October 2015, which follows up on the Five Presidents’ Report, comes as an ambitious, forward-looking concept geared to developing and improving the institutional environment and instrumental repertoire of the euro area and its architecture, which the implementation of these measures should serve to improve and more fully integrate.

3.3.

The measures taken during the 2009-2014 period mainly focused on bolstering the internal workings of the euro area. This left arrangements for the corresponding external representation failing to keep pace with its increased importance and the shift taking place in the harmonisation of economic policies. The position of the euro area in international financial institutions and ultimately in international financial markets either lost ground in relative terms or failed to live up to its potential. It follows that the improved external performance of the euro area should be felt in the outside world and must be more coherent and unified in the global financial system.

3.4.

External representation of the euro area ought to be viewed in the wider political context that motivated the Five Presidents’ Report. It can be implicitly concluded that:

3.5.

It can be argued that if external representation of the euro area is not established, then that area’s potential for formulating global economic and monetary policy will not be fulfilled and the attractiveness of the euro for transactions, investment and reserve currency in the global context will be restricted.

3.6.

The need to focus on the IMF comes from the strong complementarity between EU and IMF economic policies and their instruments now that these have been markedly strengthened and coordinated in the EU and especially in the euro area (2). The IMF is the key institution in global economic governance and has also played an important role, in collaboration with the European Commission and the European Central Bank, in shaping and implementing the rescue programmes for Member States hit by the economic and sovereign debt crises. The role of the IMF is expected to continue to grow and the need for collaboration between it and the euro area will now be seen from a much broader and more comprehensive angle than the isolated perspective of individual Member States. At the same time, the EESC maintains that if the euro area had had its own European Monetary Fund from the outset, as was put forward in the original proposals before the creation of the European Monetary System at the end of the 1970s, this could have performed during the crisis precisely the role that was ultimately played by the IMF.

3.7.

A stronger and more effective euro area external representation is hampered by a raft of obstacles that are identified and correctly assessed:

3.8.

There are fundamental points to be made on the two documents under discussion, partly in the light of what has been said above: implementation of both documents necessitates a great deal of coordination on a number of fronts: between the internal and external instruments the euro area has for improving its structure and functioning, for the harmonisation of economic policies, and for cohesion and convergence; between the euro areas and those Member States that do not have the euro (including a procedure prepared in the event of euro area enlargement); between the various forms of external euro area representation (monetary affairs, structural policy, banking and the financial market, and economic policy). The principles underlying coordination are posited on the idea of the euro as the currency unit of the EU.

3.9.

Another general point is the need to balance the procedural, administrative and legislative ideas in the documents with corresponding economic/analytical and political arguments.

4.1.

In line with the General comments above, it would be good if a simple schematic diagram were drawn up showing the correlation between the new EU economic governance and the policies of the IMF and, possibly, other institutions. This should be similar to, for example, the timetable and programme for carrying out and fulfilling the European semester and would make discussion of the matter more transparent and accessible.

4.2.

It would also be helpful to draft a scenario for the internal coordination of relevant EU institutions and bodies in order to achieve an effective synergy between them, in terms of flexibility of rules and procedures, especially in the preparatory and transition phases of implementing this concept and when the euro area is enlarged. To ensure the utmost in transparency and democratic accountability as called for in the Commission communication, the European Parliament should have a role in these matters consistent with the community method of decision-making.

4.3.

The proposal to extend external representation of the euro area is part of a package that recasts the European Semester and brings in National Competitiveness Councils and a European Fiscal Board. These steps in particular will require the EU and the euro area to be represented at other relevant fora. It would seem useful on this front to strengthen synergies with the OECD, the G7, the G20, Bank for International Settlements (BIS) and the World Bank. These steps relate to matters linked with the creation of the Banking Union and Capital Markets Union, namely the performance and coordination of macroeconomic policies, financial regulation reform and tax transparency (where the EU and the euro area are represented by the presidents of the European Council, the European Commission and the Eurogroup, staff of the European Commission and the European Central Bank, and ministers of G7 or G20 member countries). There could be other opportunities as well, such as the Asian Infrastructure Investment Bank (AIIB), where quite a lot of EU Member States are represented.

4.4.

The questions raised above suggest that making euro area representation more effective is the first and essential step towards strengthening the weight, importance and standing of the EU unit of currency in the world economy; this step should be taken in connection with the project to complete EMU and its success will very much depend on the real economic performance of the euro area and on how well the economic policies related to it are carried out.