Brussels, 20 July 2004
The European Commission today published a report on Economic and Monetary Union (EMU) after 5 Years, which highlights the positive contribution that the single currency has made to macroeconomic stability, as well as its key role in accelerating economic integration in Europe. But the report also draws attention to some difficult challenges that lie ahead for the euro area. Joaquin Almunia, EU Commissioner for economic and monetary affairs, said: “Five years on Economic and Monetary Union represents a remarkable political and institutional achievement for the EU. The challenge is now to tackle the remaining causes of slow growth in the Union.”
A Commission report published today presents a detailed examination of whether, five years on, the euro has lived up to the expectations of both its supporters and detractors. Macroeconomic stability, the principal channel through which EMU was expected to contribute to growth and employment has, in broad terms, been secured, especially when one considers the numerous external shocks that have hit the euro area since 1999. The damaging effects of intra-European exchange-rate tensions – which often accompanied external shocks in the past – have been eliminated. The ECB has successfully implemented a monetary policy that has delivered price stability and responded to changing economic circumstances. As far as budgetary policies are concerned, there has been no return to the profligate policies of the past although the sustained improvement in fiscal positions has been halted mostly due to poor growth conditions. The euro has also played a key role in accelerating economic integration in Europe, and there is emerging evidence that it has led to increased trade amongst participating countries and has accelerated the integration of financial markets in Europe.
The report highlights five challenges which lie ahead:
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