28. 9. 74 Official  Journal  of the European  Communities No C 115/17 
Opinion  on the Communication  from  the Commission  to the Council  on the progress 
achieved  in the first  stage  of economic  and  monetary  union,  on the allocation  of powers 
and responsibilities  among  the Community  institutions  and  the Member  States  essential 
to the  proper  functioning  of economic  and  monetary  union,  and  on the  measures  to 
be taken  in the second  stage  of economic  and  monetary  union 
The text  on which  the Opinion  is based  has  not  been  published  in the Official  Journal 
of the European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 112th  plenary  session  held  on 26 and  27 June  1973  the Committee,  acting  on a 
proposal  from  the Bureau,  decided  to deliver  an opinion  on the abovementioned  subject 
on its own  initiative. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the  above  matter  at its 
116th  plenary  session,  held  in Brussels  on 12 and  13 December  1973. 
The full  text  of the  Opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE: 
Having  regard  to the  resolution  of the  Council  and 
the representatives  of the  Governments  of Member 
States  of 22 March  1971  on the  step-by-step  realiz-
ation  of economic  and  monetary  union  in the  Com-
munity; 
Having  regard  to the  Communication  from  the 
Commission  to the Council  on the progress  achieved 
in the  first  stage  of economic  and  monetary  union, 
on the  allocation  of powers  and  responsibilities 
among  the Community  institutions  and  the  Member 
States  essential  to the proper  functioning  of economic 
and monetary  union  and  on the measures  to be taken 
in the second  stage  of economic  and  monetary  union; 
Having  regard  to the proposal  of its Bureau  and  the 
Decision  of the plenary  session  to instruct  the Section 
for Economic  and  Financial  Questions  to prepare  an 
opinion  on the aforementioned  Communication  from 
the Commission; 
Having  regard  to the Opinion  adopted  by the Section 
for Economic  and  Financial  Questions  at its eighth 
meeting  on 4 December  1973; 
Having  regard  to the  report  submitted  by  the 
Rapporteur,  Mr Mamert; Having  regard  to its discussions  at its 116th  plenary 
session  on 12 and  13 December,  sitting  of 13 Decem-
ber 1973; 
Whereas  the Committee  is the privileged  forum  where 
representatives  of economic  and  social  activity  in the 
Community  can  meet,  and  compare  and  express  their 
views,  it affirms  the need  to speed  up the  building 
of Europe  on concrete  bases; 
Whereas  ultimate  success  in building  Europe  depends 
to a large  extent  on the  achieving  of economic  and 
monetary  union; 
Whereas  there  have  been  very  serious  delays  in 
achieving  economic  and  monetary  union  which 
threaten  the cohesion  of the Community; 
Whereas  these  delays  have  been  caused  not  only  by 
material  obstacles,  but  also  by the  lack  of political 
will and  the  refusal  of Member  States  to consent  to 
the necessary  transfers  of sovereignty; 
Whereas  it is urgently  necessary  for the Governments 
of Member  States  to transcend  their  short-term  pre-
occupations  and  overcome  the hesitancy  their  elector-
ates may  show  in the  face  of the  immediate 
No C 115/18 Official  Journal  of the European  Communities 28. 9. 74 
contributions  which  have  to be made  to achieve  the 
long-term  advantages  of European  union; 
Whereas  therefore,  it is vital  that  all concerned,  both 
Governments  and  public  opinion  in the  Member 
States,  should  be aware  of the importance  and  urgency 
of building  Europe; 
Has adopted,  by 73 votes  to 14, with  14 abstentions 
THE  FOLLOWING  OPINION: 
A. General  considerations 
1. The  Commission's  progress  report  on the  first 
stage  of economic  and  monetary  union  in its Com-
munications  of 19 April  1973  gives  quite  an accurate 
picture  of where  the  weaknesses  in the  results 
achieved  lie.  However,  it ought  to be qualified  on 
certain  points. 
Some  progress  has in fact  been  made  in coordinating 
overall  economic  policies:  procedures  for  regular 
consultation  have  been  perfected  and  have  worked 
even  though  the  convergence  they  have  brought 
about  remain  insufficient. 
In the monetary  sphere  there  have  been  some  failures 
and setbacks  for the Community:  three  of the Com-
munity  currencies  are  still  floating  on their  own, 
whilst  the others  have  only  managed  to stay  aligned 
at the cost  of a widening  of the maximum  fluctuation 
margins  (these  have  risen  from  1-20  % in March  1971 
to 2-25%  at present)  and  a succession  of revaluations 
(Deutsch  Mark  and  Guilder).  Despite  these  setbacks, 
the maintenance  of the  joint  float  of six European 
currencies  over  a rather  turbulent  period  and  the 
trend  towards  interventions  in European  currencies 
do represent  an initial  achievement. 
2. Before  setting  new  objectives  it is important  to 
indentify  the  lessons  that  can  be learnt  from  the 
first stage.  The  Commission  quite  rightly  lays  empha-
sis on the  difficulties  caused  by the  international 
monetary  upheavals  and  by the fact  that  Community 
procedures  do not embody  sufficient  constraints.  The 
Committee  considers  that  the  slowness  in making 
progress  is also  attributable  in part  to the  lack  of 
political  will  displayed  by the  Governments  and  to 
the general  approach  adopted  for progression  towards 
economic  and  monetary  union,  that  is, fixing  multiple objectives,  without  any  order  of priority,  to be 
achieved  simultaneously. 
3. To  prevent  a repetition  of the  failures  and 
setbacks  experienced  to date,  priorities  should  be 
fixed  in the  spheres  which  are  deemed  essential, 
since  the surest  way  of putting  a halt  to the building 
of Europe  would  be to state  that  everything  should 
take pride  of place. 
4. In this  connection,  the Committee  has stressed  the 
following  points: 
(a) Monetary  union  constitutes  an  attempt  to 
safeguard  achievements  to date  (customs  union, 
common  agricultural  market).  In  addition, 
genuine  economic  union  between  Member  States 
would  be brought  about  more  quickly  through 
the unifying  power  of a common  currency.  For 
these  reasons,  and  in view  of the  fact  that  the 
monetary  situation  will  probably  continue  to be 
unstable  for quite  a long  period,  progress  towards 
monetary  union  must  be considered  a priority 
goal for the Community. 
Progressive  alignment  of the  currencies  of the 
EEC  demands  a common  fight  against  inflation, 
convergence  of the  economic  policies  of the 
Member  States,  harmonization  of their  budgetary 
and monetary  policies  and  the creation  of a real 
European  market  for goods  and  capital. 
In this  light,  it is necessary  to complete  the inter-
penetration  of  the  economies  by  removing 
technical  barriers  to trade  without  creating  new 
ones  by abuse  of regulations  and  procedures. 
Similarly,  the implementation  of far-reaching  and 
effective  machinery  for  monetary  cooperation 
must  be considered  to be essential  for furthering 
economic  and  monetary  union; 
(b) Generally  speaking,  prior  standardization  of the 
economic,  fiscal,  social  or financial  structures  of 
the various  Member  States  cannot  be considered 
to be a realistic  objective  in view  of regional  and 
national  characteristics. 
One should,  however,  be aware  that  economic 
and monetary  union  is liable  to engender  fresh 
disequilibria  at the  regional,  sectoral  and  social 
levels.  The  implementation  of policies  aimed  at 
reducing  or compensating  for  these  imbalances 
28. 9. 74 Official  Journal  of the European  Communities No C 115/19 
is of great  importance  for  the  achievement  of 
economic  and  monetary  union,  as the  work 
carried  out  by the competent  sections  within  the 
Committee  has stressed; 
(c) Economic  and  monetary  union  cannot  be attained 
by a painless  process  of adding  together  the 
inherently  divergent  and  even  occasionally 
contradictory  interests  of the  various  parties 
concerned.  On  the  contrary,  it presupposes  that 
all Member  States  and  all the  different  social 
groupings  accept  the necessary  constraints. 
In this  respect,  the  illusory  and  pernicious 
conveniences  of inflation  must  be regarded  as 
being  extremely  dangerous  for the economic  and 
social  balance  of the various  Member  States  and 
for the future  of the Community.  It is incumbent 
on the Commission  of the European  Communities 
to remind  Governments  and  public  opinion  force-
fully  and formally,  of the pressing  need  to combat 
this danger  with  greater  determination. 
The objectives  should  be fixed  at Community 
level  by a democratic  process  under  which  elected 
representatives  and  representatives  of  the 
economic  and  social  groupings  are involved  in the 
decision-making. 
The existence  of difficulties  peculiar  to certain 
States  must  not lead  to a modification  of common 
objectives  but merely  influence  the way  in which 
they are pursued. 
From  this  point  of view,  the monetary  difficulties 
specific  to certain  Member  States  call  for suitable 
monetary  measures  and  not hypothetical  financial 
compensation  based  on  structural  disparities 
which,  after  all, are difficult  to evaluate. 
Once  the  objectives  have  been  jointly  fixed,  the 
Member  States  must  be given  as much  discretion 
as possible  when  it comes  to defining  the means 
to be used. 
It is the  task  of the  Community  institutions  to 
verify  that  the  means  deployed  are  compatible 
with  Community  requirements,  to check  regularly 
the progress  of the  work  towards  union  and  to 
ensure  that  any  necessary  adjustments  are made. 
In the absence  of such  a check,  the effectiveness 
of Community  action  may  be jeopardized,  as 
indicated  by the small  degree  of success  obtained 
in the first  stage. 5. The  view  that  a stage  is completed  as soon  as 
the deadline  assigned  to it is readied,  even  if the 
aims  laid  down  for that  stage  have  not been  achieved, 
entails  dangers  which  should  not  be underestimated. 
One could  draw  the conclusion  that,  in this  light,  it 
is desirable  to postpone  transition  to the  second 
stage  until  the  main  aims  of the  first  stage  and  in 
particular  the joint  float  of all EEC  currencies  have 
been  effectively  attained.  Should  it be desired  to 
avoid  taking  such  a line  — which  could  be inter-
preted  as a slowing-down  of the building  of Europe 
— the  significance  and  the  limits  of the  concept  of 
a stage  must  be clearly  indicated.  In vital  areas  (such 
as the progressive  expansion  of the functions  of the 
European  Monetary  Cooperation  Fund),  precise, 
specific  time  schedules  would  be more  useful  than 
broad  and  somewhat  artificial  stages,  as they  would 
allow  progress  towards  the objectives  to be monitored 
every  year. 
In the immediate  future,  whatever  name  is given  to 
the next  period  of work  on economic  and  monetary 
union,  the  measures  to be undertaken  must  aim 
primarily  — in line  with  the guidelines  laid  down  at 
the Paris  Summit  Conference  — at effective  achieve-
ment  of the initial  aims  assigned  to the EEC,  and  in 
particular  at reduction  of the margins  of fluctuation 
between  all the currencies  of the Community. 
6. As  regards  the  institutions,  inferences  should  be 
drawn  from  the  strengthening  of the  monetary 
solidarity  of the Member  States  and  the transfers  of 
responsibilities  from  national  to Community  bodies 
which  this  entails. 
Thus,  the European  Parliament  should  have  powers 
to approve  and  check  the  Community  budget  in 
addition  to the  powers  of the  various  national 
parliaments  in the  economic  and  monetary  field 
which  will  have  progressively  been  transferred  to the 
Community. 
B. The  Commission's  proposals 
7. The  programme  of action  proposed  by the Com-
mission  seems  both  too extensive  and  not  sufficiently 
ambitious.  Too  extensive,  because  it includes  certain 
structural  policy  measures  whose  implementation 
does  not seem  essential  for the attainment  of economic 
and monetary  union.  Not  sufficiently  ambitious 
because  the  planned  rate  of monetary  alignment 
appears  to be relatively  slow,  in view  of the nearness 
of the deadline  laid  down  for its completion. 
No C 115/20 Official  Journal  of the European  Communities 28. 9. 74 
8. The  measures  proposed  by the Commission  in the 
field  of overall  economic  policy  seem  to be calcu-
lated  to promote  better  harmonization  of the budget-
ary, monetary  and  short-term  economic  policies  of 
the various  States.  Nevertheless,  it is necessary  to 
bear in mind  the  limits  to which  intergovernmental 
consultation  and  coordination  procedures  are subject. 
9. As  regards  closer  coordination  of national  bud-
getary  policies,  the creation  of Community  procedures 
for implementing  certain  budgetary  policy  instruments 
in each  Member  State  must  in no way  call  into 
question  the  budgetary  prerogatives  of the  national 
parliaments  as long  as their  role  has not  been  taken 
over by the European  Parliament. 
10. As  for  structural  policies,  the  measures  to 
compensate  for regional,  sectoral  or social  imbalances 
brought  about  by setting  up economic  and  monetary 
union  must  be pursued,  for  their  implementation 
will contribute  efficiently  towards  the  strengthening 
of monetary  cooperation. 
Tax harmonization  must  be reinforced  in the  areas 
where  it is useful  for creating  the  conditions  of a 
unified  market. 
The unification  of capital  markets  must  be based  on 
progressive  differentiation  of the  rules  for  capital 
movements  within  the  Community  and  those  for 
capital  movements  to and  from  the rest  of the world, 
and progressive  liberalization  of access  to the national 
capital  markets  by residents  of other  Member  States. 
Closer  alignment  of capital  market  structures  must 
be sought  only  where  it will  improve  their  operation, 
and not  just  with  the  aim  of removing  existing 
differences. 
11. The  Committee  endorses  the Commission's  pro-
posals  concerning  completion  of the internal  market 
and industrial  policy,  except  for the comments  made 
in its earlier  opinions  on this  matter. 
12. As  far as the plan  to set up an economic  analysis 
and research  institute  of the European  Communities 
is concerned,  the Committee,  in the absence  of any 
written  details,  reserves  its position  on the usefulness 
of such  a body  until  such  a time  as a document  on 
this matter  is submitted  to it. 
13. The  Committee  endorses  the  proposals  on the 
Community  budget,  subject  to the  European  Parlia-
ment  being  given  powers  in respect  of this  budget 
equivalent  to those  of the national  parliaments  in the 
budgetary  field. 14. In the  monetary  sphere,  it seems  to be  of 
fundamental  importance  — as the Commission  points 
out — that  parity  adjustments  should  be subject  to 
Community  surveillance,  by giving  the  Community 
a watching  brief  regarding  changes  in parities  and, 
above  all, by creating  genuine  Community  solidarity 
as to credits  granted  by the Fund.  Nevertheless,  these 
proposals  are not enough  to lead  to monetary  union. 
It is also  necessary  to strengthen  monetary  cooperation 
between  Member  States. 
The setting-up  of the  European  Monetary  Cooper-
ation  Fund  and  the existence  of the present  machinery 
for short-  and  medium-term  monetary  aid  are  the 
first elements  of this  cooperation  which  must  lead  in 
time  to the  pooling  of currency  reserves.  This 
constitutes  a preliminary  to the complete  achievement 
of monetary  union. 
Either  by broadening  present  procedures  for monet-
ary aid,  or by  the  gradual  pooling  of currency 
reserves,  the  Fund  should  be empowered  to have 
reliable  resources  available  to it. These  should  allow 
it to grant  loans,  under  conditions  clearly  defined  in 
advance,  being  both  sufficiently  large  and  of 
sufficient  duration  to  counteract  effectively  the 
consequences  of short-term  economic  trends  likely 
to affect  the various  currencies. 
In addition,  this  load  machinery  should  be designed  so 
that it encourages  the  States  to take  domestic 
measures  to get  their  external  finances  back  into 
balance. 
It is essential  to be aware  that  any  progress  along 
this path  presupposes  that  the  EEC  provides  itself 
with  an adequate  procedure  for settling  claims  and 
debts  within  the Community. 
In this  connection,  it is essential  not  only  that  the 
loans  be refundable  but that  repayments  be made  by 
transferring  reserve  assets  whose  real  value  can 
neither  be disputed  by certain  States  nor  modified 
unilaterally  by one  or more  States. 
It is in this  way  that  the  European  Monetary 
Cooperation  Fund,  which  at present  had  merely  the 
function  of multilateralizing  bilateral  claims  and  debts 
and multilateralizing  settlements,  would  receive  the 
means  for  establishing  real  monetary  solidarity 
between  Member  States.  Such  an extension  of the 
role of the European  Fund  as indicated  above  should 
have  a considerable  constraining  and unifying  function. 
It should  be the first  concrete  step  towards  economic 
ajid monetary  union,  whose  attainment  must  be 
28. 9. 74 Official  Journal  of the European  Communities No C 115/21 
unaffected  by difficulties  and  expediencies  of a poli-
tical or short-term  economic  nature. 
15. In order  to promote  economic  and  monetary 
union,  efforts  will  have  to be made  to strengthen  the 
effectiveness  of Community  decision-making  and  to 
make  the  EEC  institutions  more  democratic  by 
associating  the  European  Parliament  as closely  as 
possible  with  decisions  and  by  fixing  a date  for 
direct  elections  to the  Parliament  which  could  take 
place,  at the latest,  at the beginning  of the final  stage 
of economic  and  monetary  union. 
16. As  regards  participation  by representatives  of the 
different  social  and  economic  groupings  in establishing 
economic  and  monetary  union,  the  Committee  sup-
ports  the Commission's  view  that  consultation  should 
be more  intense  and  should  take  place  when  decisions 
are still  at the  preparatory  stage.  The  Committee 
points  out,  once  again,  the role  which  it should  play 
here,  convinced  as it is that  true  consultation  between 
the Community  institutions  and  representatives  of the 
various  socio-professional  categories  in the Committee is necessary  for  the  achievement  of economic  and 
monetary  union. 
17. Similarly,  consultation  of the  Economic  and 
Social  Committee  should  be  both  as general  as 
possible  and  occur,  far enough  in advance  to allow 
this body  the  time  necessary  for  an examination  in 
depth  of the documents  submitted  to it. 
In this  connection,  the Committee  points  out  that  it 
has had  to deal  with  the Communication  of 19 April 
1973  on transition  to the  second  stage  of economic 
and monetary  union  on its own  initiative,  since  it 
had not been  consulted  on it by the Commission. 
Done  at Brussels,  13 December  1973. 
The Chairman 
of the Economic  and  Social  Comittee 
Alfons  LAPP  AS 
ANNEX 
to the  Opinion  of the  Economic  and  Social  Committee 
The following  amendment  was  rejected  in the course  of the proceedings: 
Point  2: 
Delete  the last  phrase  of the  last  sentence 
'and  to the  general  approach.  . 
Result  of the  vote: 
for: 
against: 
abstentions: 25 
41 
18.