A4-0132/95

Resolution on the first annual report of the European Monetary Institute (EMI)

The European Parliament,

- having regard to the EC Treaty and in particular Article 109f thereof,

- having regard to Protocol No 4 annexed to the EU Treaty, on the Statute of the EMI,

- having regard to the first annual report of the EMI which was prepared and addressed to the European Parliament and other bodies pursuant to Article 11.3 of its Statute (C4-0124/95),

- having regard to the hearing of the President of the EMI at the meeting of the Subcommittee on Monetary Affairs of the Committee on Economic and Monetary Affairs and Industrial Policy held on 12 April 1995,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0132/95),

A. whereas the first annual report of the EMI opens with an account of economic, monetary and financial developments and the situation regarding economic convergence in the Member States of the European Union; whereas it then considers the role and activities of the EMI and, finally, the institutional features of the national central banks in relation to the provisions of Articles 104, 104a, 107 and 108 of the EC Treaty ,

B. whereas the breadth of the report is an indication of the EMI's will to cooperate as closely as possible with the Community's institutions and to provide them and the public at large with as much information as possible on progress towards the third stage of Economic and Monetary Union,

C. whereas although some progress has been made on price stability, the risk of inflationary pressure has not been eliminated, particularly in countries where fiscal deficit and public debt remain high,

D. whereas the improvement observed in fiscal deficits, due in part to cyclical factors, is not equal in all countries and in many is not stable, and therefore there is the danger that the fiscal situation may become critical again once the economic cycle turns,

E. whereas in 1994 there was greater stability on the exchange markets compared with 1992 and 1993, but whereas recent disruption on the exchange markets and the devaluations of the last few months are creating concern,

F. whereas the downward trend in long-term interest rates in 1993 was reversed in 1994 in most countries, with substantial differences between the Member States,

G. whereas there has been insufficient progress towards genuine economic convergence; whereas unemployment, to a large extent structural, remains high, with considerable differences between the Member States, which is impeding efforts to pursue a rigorous monetary and fiscal policy,

H. whereas the EMI has thus far accomplished a great deal in preparing for the third stage of EMU; whereas, however, much remains to be done to achieve a single monetary and fiscal policy,

I. whereas greater coordination is required between the Member States' fiscal policies, particularly once the third stage is introduced,

J. whereas not all Member States have achieved significant progress towards the independence of the central banks,

K. whereas prior announcement of the application of the convergence criteria to exchange rates could give rise to speculation and whereas any delay in introducing the institutional changes and operational structures of the ESCB would create uncertainty and intensify speculation,

1. Welcomes the breadth of the first annual report of the EMI;

2. Regrets nevertheless that, because of delay of the political decisions by the European Council, the choice of the seat of the European Monetary Institute and the appointment of its president was delayed, and insists that the necessary decisions on staffing of the ECB are taken in good time before the start of the third stage;

3. Calls on the Member States to take appropriate measures to safeguard productive investment and levels of employment;

4. Calls on those Member States which have not yet achieved any improvement of their fiscal situation to step up their efforts to eliminate the structural causes of fiscal imbalances; expects them to focus their efforts on reducing interest rates and spending on public debt servicing, cutting back expenditure rather than increasing revenue; whereas a consistent and stable fiscal policy should be pursued which is in line with the long-term trend and does not exacerbate the structural nature of the fiscal imbalances;

5. Calls on the Council, the Commission and the Member States to step up their efforts to strengthen actual economic convergence, making effective use of appropriate resources, including the Structural Funds, and taking the tax- payers into account;

6. Calls on the Council and Commission to concentrate their efforts to establish a real Community policy of promoting employment, which is indispensable with a view to achieving a genuine economic and monetary union and ensuring economic and social cohesion;

7. Is convinced that monetary-policy measures should be supported by greater coordination of economic policy among the Member States and should be clearly related to Article 2 of the EC Treaty, which entrusts to all European institutions the task of promoting a high level of employment and of social protection, the raising of the quality of life, and economic and social cohesion and solidarity among Member States;

8. Welcomes the prompt and effective manner in which the EMI was organized and the work it has accomplished to date; calls on the Institute to continue its efforts to improve coordination of monetary policy throughout the present stage and to decide promptly on the methods and means by which the ESCB may effectively pursue a single monetary policy in the third stage of EMU; considers, however, that it might be advisable to consider now whether there should be criteria for determining how effectively monetary policy is implemented, such as a monetary target (percentage increase in money supply), and other targets, including targets relating to the real economy, in order to secure sustainable monetary performance;

9. Considers that, in accordance with the principle of subsidiarity, the ECB should, in conducting monetary policy, make as much use as possible of the national central banks, pursuant to Article 12 of the statutes of the ESCB, to implement acts which are among the ESCB's duties;

10. Calls on the EMI, having particular regard to developments in recent months, to draw up recommendations for monetary policy measures; considers that there should be greater cooperation in this area both within the European Union and with the monetary authorities of its main trading partners;

11. Welcomes the progress made in monitoring the operation of the Ecu clearing system by the EMI and calls for the intensification of the efforts to facilitate the use of the Ecu, particularly in the area of the use of electronic money;

12. Calls on the Commission and the Council to submit proposals so that, after the entry in the third stage of EMU, the governments continue to coordinate fiscal policy in compatibility with the targets of price stability;

13. Calls on those Member States which have not yet made the requisite institutional adjustments to take the appropriate legislative measures forthwith to ensure the independence of all the national central banks in due time before the third stage of EMU;

14. Expects the EMI to address the reports referred to in Article 109j of the EC Treaty and Article 7 of its Statute also to the European Parliament;

15. Calls on the Member States' governments to take the necessary political initiatives and decisions to define, as soon as possible, a transparent and concrete timetable for the transition to the third stage of EMU with those Member States which fulfil the conditions laid down in the Treaty; stresses, however, that they should not take any organisational or structural measure which could impede the participation of the other Member States at a later stage;

16. Considering, on the one hand, the implications of the relations between the single European currency and the currencies of the Member States not participating in the third stage of EMU for the organisation of exchange policy by the ESCB, and, on the other hand, the need to support the efforts for the full participation by all Member States, invites the EMI to elaborate proposals for the establishment of an exchange-rate mechanism, possibly similar to the European Monetary System;

17. Considers that the establishment of an exchange-rate mechanism, possibly similar to the European Monetary System, between the single European currency and the currencies of the Member States not participating in the third stage of EMU, would confirm the resoluteness of the European Union, and that the mechanism should operate in such a way as to support the attempt to secure full participation by all the Member States;

18. Affirms that it will carry out its duties with respect to the appointment of the President, Vice-President and other members of the Executive Board of the European Central Bank without delay;

19. Calls on the Council to support the EMI's groundwork for the start of the third stage by taking political decisions in good time;

20. Instructs its President to forward this resolution to the Council, the Commission, the EMI, the Governors of the Member States' central banks, and to the governments and parliaments of the Member States.