COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M<89) 466 final 
Brussels, 13 October 1989 
Proposal for a 
COUNCIL DECISION 
on the attainment of progressive convergence of 
economic performance during stage one of 
Economic and Monetary Union 
(presented by the Commission) 
Proposal for a 
COUNCIL DECISION 
on the attainment of progressive convergence 
of economic performance during stage one of 
Economic and Monetary Union 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Articles 103 and 145 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the Opinion of the European Parliament, 
Having regard to the Opinion of the Economic and Social Commit­
tee, 
Whereas the European Council, at its meeting in Madrid in June 
1989, restated "its determination progressively to achieve Econo­
mic and Monetary Union as provided for in the Single Act"; deci­
ded that "the first stage of the realization of Economic and 
Monetary Union would begin on 1st July 1990"; and stated that 
"Economic and Monetary Union must be seen in the perspective of 
the completion of the Internal Market and in the context of eco­
nomic and social cohesion", and that "its realization would have 
to take account of the parallelism between economic and monetary 
aspects, respect the principle of 'subsidiarity' and allow for 
the diversity of specific situations", 
Whereas in order to facilitate progress towards Economic and 
Monetary Union, a high degree of convergence of economic perform­
ances between Member States is necessary through greater compati­
bility and closer coordination of economic policy; whereas 
such strengthening of economic policy coordination also contri­
butes to the achievement of Community objectives, in particular 
to convergence at a high level of economic performance in the 
framework of monetary stability, 
.../... 
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Whereas coordination of economic policies should be based on an 
open market approach both internally and externally, 
Whereas the achievement of the goals of the Single European 
Act, especially the completion of the Internal Market, vhich will 
increase the degree of economic and financial integration and 
reinforce competition and structural chango and thus -i.nplify Lr>-
cross-border effects of economic policies, will require more 
effective policy coordination; whereas according to Article 
102a Member States shall take account of the experience acquire-? 
in cooperation within the framework of the European Monetary 
System; whereas the first stage of Economic and Monetary 
Union should provide a sound basis for its successful further 
development and sustainability, 
Whereas the strengthening of coordination should reply on the 
political will to develop further the consensus on the broad eco­
nomic policy approach; whereas progress in this coordination 
process calls for flexibility, subsidiarity and mutual commit­
ments in decision-making as well as for learning-by-do:ng, 
HAS ADOPTED THIS DECISION : 
Article 1 
In order to achieve sustained non-inflationary growth m the Com­
munity, together with a high level of employment and the degree 
of economic convergence necessary for the success of Stage One of 
Economic and Monetary Union, in the perspective of the completion 
of the Internal Market and in the context of the economic and 
social cohesion, the Council shall undertake multilateral sur­
veillance. In this context, it will examine on a regular basis : 
- the economic conditions, prospects and policies in the Commu­
nity and its Member States; 
- the compatibility of policies within Member States and in the 
Community at large; 
- the external economic environment and its interaction with the 
economy of the Community. 
Multilateral surveillance shall cover ail aspects of economic 
policy in both the short-term and medium-term perspectives. 
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Article 2 
The Council shall undertake multilateral surveillance in res­
tricted sessions. It may authorise its Chairman to make public 
the results of its deliberations. 
Through learning-by-doing, multilateral surveillance should in­
creasingly result in compatible policies by way of mutual commit­
ments on the part of Member States. In this context, the Council 
may, acting on proposal from the Commission, issue policy recom­
mendations. 
Article 3 
The Council shall proceed with multilateral surveillance on the 
basis of reports and analysis submitted by the Commission. These 
shall include : 
- indicators of economic performance including monetary and bud­
getary policies, supply and demand trends, price and cost 
developments, employment, financial markets, external and 
internal imbalances; 
- regular country reports on national economic conditions, pros­
pects and policies; 
- an annual report on the economic outlook of the Community which 
shall review the economic outlook and the underlying economic 
policy orientation. 
The Council's work on multilateral surveillance shall be prepared 
by the Monetary Committee, whose chairman will participate in the 
Council meetings. 
Article 4 
On a proposal from the Commission the annual economic report 
shall be adopted by the Council, having regard to the opinions by 
the Eurooean Parliament and the Economic and Social Committee. 
.../... 
Article 5 
Multilateral surveillance shall focus on macroeconom::, micro-
economic and structural policies. It shall include a review o. 
budget policies, to the extent possible ahead of nar:>r il hudqc 
tary planning, focussing particularly on the si^e an: finan^l.-. 
of budget deficits. The resulting coordination r.ir re ;are sr.i. 
involve analysis of medium-term budgetary policy - rends an 
their implications for overall economic policy. ?. _• Economy. 
Policy Committee shall be consulted for the surveilla-. _*e exercis-
in this context. 
Article 6 
When potential or actual economic developments in .::.= or :nor-
Member States threaten the Community economy, tne c^-r.cii, :po-
proposal by the Commission and after consultation of i e Monetar; 
Committee, shall proceed to an examination of the ecor.r.m situa­
tion. Such examination may result in the formulation f rountry-
specific recommendations with a view to promoting t'••»•=• necessar; 
policy corrections. 
Article 7 
When events outside the Community threaten to have serious consé­
quences for the Community economy, the Council, upon proposal l,\ 
the Commission and after consultation of the Monetary "ommittex.-
shall meet to consider possible measures. Where "; ir.etary :: 
exchange rate policy is concerned, the Committee of Governors o: 
the Central Banks of the Member States of the European Commun... t; 
shall be consulted. 
Article rt 
In order to ensure better consistency between monetary and oc:.--: 
economic policies, the Committee of Governors of the Centra 
Banks of the Member States of the European Community shall re­
port the multilateral surveillance exercise. Its Cna.r-ia.n shal 
be invited to participate in the Council meetings. 
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Article 9 
The Chairman of the Council and the Commission shall report regu­
larly on the results of multilateral surveillance to the Europear 
Council and to the European Parliament. 
Governments shall bring the results of the multilateral surveil­
lance to the attention of their national parliaments =o that i' 
can be taken into account in national policy making. 
Article 10 
On the basis of a report submitted by the Commission, the Council 
shall periodically examine the progress made in muitilateri: 
surveillance through the application of this decision. This 
report shall also be transmitted to the European Parliament. 
Article 11 
The following acts are hereby repealed : 
(i) Council Decision 74/120/EEC of 18 February 1974 on the attainment 
of a high degree of convergence of the economic policies of 
the Member States of the European Community; 
(ii) Council Directive 74/121/EEC of 18 February 1974 on stability, 
growth and full employment in the Community. 
Article 12 
This Decision is addressed to the Member States. 
Done at For the Council 
ISSN 0254-1475 
COM(89) 466 final 
DOCUMENTS 
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Catalogue number : CB-CO-89-422-EN-C 
ISBN 92-77-53156-8 
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