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Resolution of the European Council on economic policy coordination (1997)
The European Council demonstrates a formal commitment to respecting the provisions of the Treaty in terms of surveillance and coordination of economic policies, and strengthens coordination in practice, both between the Member States, which will share the single currency (among other things by setting-up an informal "Euro" Group) and between these and the Member States which will not participate.
Resolution of the European Council, of 13 December 1997, on economic policy coordination in stage 3 of economic and monetary union and on Articles 111 and 113 of the EC Treaty [Official Journal C 35 of 2.2.1998].
The euro-area Member States will share a single monetary policy and a single exchange rate, while the other aspects of economic policy will remain national issues. To the extent that national economic developments will influence monetary conditions in the euro-area, closer Community surveillance and coordination of economic policies among euro-area Member States will be necessary.
All Member States, including those remaining outside the euro-area (Denmark, the United Kingdom and Sweden) must be included in the coordination of economic policies, as they all participate in the single market and may also participate in the new exchange rate mechanism.
Enhanced surveillance and coordination should cover the following areas:
- macroeconomic developments in Member States and the development of the exchange rate for the euro;
- budgetary positions and policies;
- structural policies in labour, product and services markets, as well as cost and price trends.
Coordination must adhere to the principle of subsidiarity.
To ensure the smooth functioning of economic and monetary union (EMU), the broad economic policy guidelines should provide more concrete and country-specific guidelines and focus more on measures to improve growth potential and create jobs.
Member States should commit themselves to a comprehensive and speedy exchange of information on economic developments and policy intentions with a cross-border impact, even if there is no threat of a deterioration in the budgetary situation. For its part, the Council could show more inclination to address recommendations to Member States whose economic policies are not consistent with the broad guidelines.
The Economic and Financial Affairs Council (ECOFIN) occupies the defining position at the centre of the economic coordination and decision-making process. Whenever matters of common interest are addressed, they will be discussed by the ministers of all Member States. However, the ministers of the Member States participating in the euro-area may meet informally among themselves to discuss issues connected with their shared specific responsibilities for the single currency (this formation of ministers normally meets the day before the ECOFIN Council meeting).
As the Council must monitor the development of the euro exchange rate, it is important for it to be able to exchange views and information with the European Central Bank (ECB). It may, in exceptional circumstances, formulate general guidelines for exchange-rate policy in relation to non-EC currencies. These must respect the independence of the ESCB and be consistent with the primary objective of the European System of Central Banks (ESCB), which is to maintain price stability.
The Council should decide on the position of the Community on issues of particular relevance to EMU, in connection with both bilateral relations with third countries and proceedings in international organisations or informal international groupings. Only euro-zone Member States will participate in votes.
The Council and the European Central Bank will represent the Community at international level in compliance with the allocation of powers laid down in the Treaty. On elements of economic policy other than monetary and exchange-rate policy, the Member States should continue to present their policies outside the Community framework, while taking full account of the Community interest.
Representation in international organisations should take account of those organisations' rules. For example, only countries can be members of the International Monetary Fund (IMF).
In the light of the allocation of responsibilities laid down in the Treaty, the harmonious economic development of the Community will necessitate continuous dialogue between the Council and the ECB, involving the Commission and respecting all aspects of the independence of the ESCB.
The Economic and Financial Committee will provide the framework within which the dialogue can be prepared and pursued at senior official level.