The Economic and Monetary Union (EMU) is an economic and monetary policy system based on a fundamental asymmetry and consisting of three elements: 1. an independent central bank (ECB) which is exclusively charged with monetary policy in the euro zone; 2. economic policies (fiscal and budgetary policies) which continue to be pursued individually at member state level but which are subject to specified common rules (specifically the stability and growth pact (SGP), the procedure in the case of an excessive deficit and the acquis communautaire of the single market); and, finally, 3. recognition that economic policies by the member states are a matter of "common concern" which consequently need some amount of co-ordination at Council level. The ECB pursues its monetary policy at central level for all members of the euro zone. Its primary objective is to achieve price stability in the euro zone. In its monetary policy strategy, the ECB concentrates on three key elements: a quantitative definition of price stability as the chief goal of the euro system (defined by the ECB as an inflation rate of not more than 2 percent), and a "two-pillar concept". For the "first pillar", a reference value of 4.5 percent was specified for the growth of the money supply (M3). The "second pillar" includes a whole bundle of business indicators in order to obtain adequate forecasts of inflation. In spite of an unfavourable international situation (oil price shock of 2000-01, global recession in 2001-02), the ECB was successful in shaping its monetary policy. EMU has not only revolutionised monetary policy but has also left a marked impression on the fiscal stability culture in the EU. The obligation to meet the convergence criteria alone has already reduced budget deficits in the EU markedly below 3 percent of GDP. With the entry into the third stage of EMU, the trend was further enhanced, not least due to the dictates of the stability and growth pact. Whereas in 1997 (prior to EMU entry) only three of the 15 EU member states (Denmark, Ireland and Luxembourg) boasted of a budget surplus, their number had grown to nine countries in 2001. This not only interrupted the dynamic growth of the national debt but also contributed to making state finances more sustainable. But although the stability and growth pact fostered greater fiscal policy discipline, it still shows its inherent weaknesses in times of weak growth or recession. With competences clearly allocated (ECB exclusively in charge of monetary policy and EU member states in charge of economic policy), economic policy needs to be co-ordinated. Over time, complex mechanisms and a number of processes have been established (Luxembourg process for employment, Cardiff process for structural policy and functioning of the single market, Cologne process for macroeconomic dialogue, Lisbon process for an open method of co-ordination). An annual rhythm of multilateral monitoring has been formed within the scope of the pact, accompanied by the Broad Economic Policy Guidelines (BEPG). It is an open issue whether this elaborate (administrative, political) process does not already cancel out possible gains of co-ordination. In view of such findings, any demand for further and stronger co-ordination made (e.g. by the Commission) to the European Convention currently discussing the future Europe would thus be rather contra productive. It is especially in comparing the USA and EU in terms of their economic performance over the past decade that an analysis of the complex economic policy interactions within EMU may well lead to the conclusion that not only are labour and capital markets in the EU still too rigid but that its economic policy is still too inflexible.
Währungsunion; WWU; Wirtschaftspolitik; Geldpolitik; Fiskalpolitik; Budgetpolitik; Instrumentarium; Die wirtschaftspolitische Architektur der WWU; The Architecture of Economic Policy in the EMU
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