COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL AND THE EUROPEAN CENTRAL BANK FURTHER STEPS TOWARDS COMPLETING EUROPE'S ECONOMIC AND MONETARY UNION: A ROADMAP
Date: 2017-12-06
Institutions: European Commission, Secretariat-General
Subjects: EU Member State, Economic and Monetary Union, development plan, economic development, economic policy, economic recovery, euro area, fiscal policy, monetary policy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 6.12.2017 COM(2017) 821 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL AND  THE EUROPEAN CENTRAL BANK FURTHER STEPS TOWARDS COMPLETING EUROPE'S ECONOMIC AND MONETARY UNION: A ROADMAP  
 
 
1.  INTRODUCTION 

It is almost sixteen years since the first euro coins and notes entered our daily lives. The currency is 
now used every day by 340 million Europeans in 19 euro area Member States. It is the second most 
used currency worldwide. Sixty other countries and territories around the world, home to 175 million 
people, have chosen to use the euro as their currency or to peg their own currency to it.  

The financial and economic crisis that hit Europe in 2008, the consequences of which are still felt to 
this  day,  did  not  start  in  the  euro  area  but  it  laid  bare  some  of  its  institutional  weaknesses.  As  an 
emergency  response  to  the  immediate  challenges,  several  instruments  were  adopted.  They  provided 
new financial firewalls, assisted the countries most affected and stepped up policy coordination at EU 
level.  They  strengthened  the  fiscal  and  financial  rules  in  order  to  prevent  the  crisis  from  escalating 
further. Monetary policy action by the European Central Bank has also proved decisive. 

After years of low or no growth, determined efforts at all levels have started to pay off. Europe is 
now experiencing a robust recovery. All Member States are now growing and overall EU growth has 
stood at around 2% on average for several years in a row.1 The economic sentiment is at its highest in 
the EU and the euro area since 2000. Unemployment is at its lowest since late 2008. Popular support 
for the euro is at its highest in the euro area since the introduction of the euro notes and coins in 2002.2 
However,  as  the  current  Commission  said  when  taking  office,  the  crisis  is  not  over  as  long  as 
unemployment remains so high, with 14.3 million people still without a job in the euro area in October 
2017.  

Important lessons needed to be drawn from the crisis years. The relevant issues were already clearly 
identified in the Five Presidents' Report of June 2015.3 Since then, a lot has been done to "deepen" 
the  Economic  and  Monetary  Union  by  "doing".  The  European  Semester  of  economic  policy 
coordination has been strengthened with clearer guidance for the euro area as a whole and a stronger 
focus  on  social  aspects.  Economic  governance  has  been  improved,  with  the  creation  of  a  European 
Fiscal  Board  and  National  Productivity  Boards.  Technical  assistance  to  Member  States  was  boosted 
with  the  creation  of  the  Structural  Reform  Support  Service.  Important  steps  towards  completing  
the Banking Union4 and Capital Markets Union5 have been taken, notably by advancing in parallel on 
risk-reduction  and  risk-sharing  measures  in  the  banking  sector.  To  increase  ownership  at  all  levels,  
the dialogue with national and European political actors and social partners has also intensified. 

As a result, the euro area architecture is more robust than ever before but this does not mean that it is 
complete.  The  Reflection  Paper  on  the  deepening  of  the  Economic  and  Monetary  Union,6                        
as well as the Reflection Paper on the future of EU finances7 presented by the Commission as part of 
the  follow-up  to  the  White  Paper  on  the  Future  of  Europe,8  recall  the  state  of  play  and  outline  
a possible way forward to 2025.  

1   European Economic Forecast Autumn 2017, Institutional Paper 63. 
2   Flash Eurobarometer 458, 4 December 2017. 
3   “Completing Europe's Economic and Monetary Union”, Report by Jean-Claude Juncker, in close cooperation 

with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz, 22 June 2015.  

4   See in particular COM(2017) 592 final, 11 October 2017.  
5   COM(2017) 292 final, 8 June 2017. 
6   COM(2017) 291, 31 May 2017. 
7   COM(2017) 358, 28 June 2017. 
8   COM(2017) 2025, 1 March 2017. 

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Europe is now visibly regaining its strength. Both economically and politically, there is a window of 
opportunity  and  positive  developments  are  further  encouragements  to  act.  There  should  be  no 
complacency: one should always fix the roof when the sun is shining. 

In  his  State  of  the  Union  address  on  13  September  2017,9  President  Juncker  set  out  his  views  for  
a  More  United,  Stronger  and  More  Democratic  Union  and  made  it  clear  that  the  completion  of 
Europe's Economic and Monetary Union is an essential part of the roadmap leading to the meeting of 
Leaders in Sibiu, called by President Tusk for 9 May 2019, where important decisions on the future of 
Europe should take place.  

This  is  also  reflected  in  the  Leaders'  Agenda,10  with  EU  Leaders  planning  a  Euro  Summit  
on  15  December  2017  to  discuss  a  timeline  for  decisions  on  Economic  and  Monetary  Union  and  
the  Banking  Union,  and  a  dedicated  meeting  planned  on  28-29  June  2018  with  a  view  to  reaching 
concrete decisions. 

Europe's Economic and Monetary Union today 

Source: European Commission 

The  call  for  unity,  efficiency  and  democratic  accountability  of  the  State  of  the  Union  address  is 
particularly relevant for the completion of the Economic and Monetary Union: 

  Unity: The euro is the single currency of the EU and what is conceived for the euro area should 
also  be  conceived  for  and  with  those  Member  States  that  are  expected  to  join  the  euro  in  the 
future.  With  the  exception  of  the  United  Kingdom  and  Denmark,  all  non-euro  Member  States 

9   President Jean-Claude Juncker’s State of the Union Address 2017, 13 September 2017. 
10   Leaders’ Agenda: Building our future together, endorsed by the European Council on 20 October 2017. 

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are  legally  committed  to  joining  the euro  eventually.11  Moreover,  with  the United  Kingdom's 
departure,  euro  area  economies  will  represent  about  85%  of  the  EU's  total  Gross  Domestic 
Product.  The  EU's  political  and  economic  integration,  of  which  the  single  market  is  the  core, 
means  that  the  futures  of  both  euro  and  non-euro  Member  States  are  already  intertwined,  and  a 
strong and stable euro area is key to its members as well as to the EU as a whole. This is why the 
proposals  in  this  package  address  the  needs  and  interests  of  both  euro  and  non-euro  Member 
States, as inter-dependent parts of the Economic and Monetary Union. 

  Efficiency: A stronger Economic and Monetary Union requires stronger governance and a more 
efficient  use  of  available  resources.  The  current  system  still  reflects  a  patchwork  of  decisions 
taken to face an unprecedented crisis.  This  has sometimes led  to a  multiplication  of instruments 
and  an  increased  sophistication  of  rules,  which  is  a  source  of  complexity  and  creates  risks  of 
duplications.  Greater  synergies,  streamlined  procedures  and  the  integration  of  intergovernmental 
arrangements within the EU legal framework would strengthen governance and decision-making. 
It is also for efficiency reasons that all the changes proposed by the Commission as part of today's 
package can be implemented within the framework of the current EU Treaties. 

  Democratic  accountability:  Completing  the  Economic  and  Monetary  Union  also  means  greater 
political  responsibility  and  transparency  about  who  decides  what  at  the  different  levels.  
This requires bringing the European dimension of decision-making closer to citizens and more to 
the  forefront  of  national  debates,  as  well  as  making  sure  that  both  national  Parliaments  and  the 
European  Parliament  have  sufficient  powers  of  oversight  on  the  management  of  the  EU's 
economic  governance.  This  should  also  lead  to  greater  ownership  of  collective  decisions  and 
openness on the way they are taken and communicated.  

In recent years, many views have been expressed on the completion of the Economic and Monetary 
Union.  Opinions  may  differ  but  there  is  a  broad  consensus  on  the  need  to  make  further  progress. 
There  have  also  been  very  significant  contributions  from  the  European  Parliament12  and  important 
discussions in the Eurogroup.13  

This  Communication  gives  a  summary  of  the  rationale  and  content  of  the  initiatives  presented  
today  by  the  Commission.  It  then  recalls  how  this  package  is  embedded  in  a  broader  roadmap  
to deepen Europe's Economic and Monetary Union by 2025 and provides a timeline for action in 
the next 18 months. 

11  Among 

the  non-euro  Member  States,  Denmark  and  Bulgaria  have  pegged 

to  
the  euro  since  the  introduction  of  the  latter  in  1999.  Unlike  Denmark,  Bulgaria  does  not  participate  in  
the Exchange Rate Mechanism II, but the lev is pegged to the euro through a currency board arrangement. 
12   See,  in  particular,  the  European  Parliament  resolutions  of  16  February  2017  on  i)  budgetary  capacity  for  
the euro area (2015/2344(INI)), ii) possible evolutions of and adjustments to the current institutional set-up of 
the European Union (2014/2248(INI)) and iii) improving the functioning of the European Union building on 
the potential of the Lisbon Treaty (2014/2249(INI)). 

their  currency 

13   See, in particular, Eurogroup of 6 November 2017 on “Fiscal capacity and fiscal rules for the Economic and 
Monetary Union”, Eurogroup of 9 October 2017 on “Deepening Economic and Monetary Union – The role 
of the European Stability Mechanism” and Eurogroup of 10 July 2017 on “Follow-up on deepening of the 
Economic and Monetary Union”. 

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2.  TODAY'S INITIATIVES  

As announced in the 2017 State of the Union address and the accompanying Letter of Intent, today's 
initiatives set out further steps towards completing the Economic and Monetary Union.  

An overview of today's package 

Today, the Commission is presenting the following proposals and initiatives: 
  A  proposal  for  the  establishment  of  a  European  Monetary  Fund  anchored  in  the  Union  legal 

framework; 

  A  proposal  to  integrate  the  substance  of  the  Treaty  on  Stability,  Coordination  and  Governance 
into  the  Union  legal  framework,  taking  into  account  the  appropriate  flexibility  built  into  the 
Stability and Growth Pact and identified by the Commission since January 2015; 

  A  Communication  on  new  budgetary  instruments  for  a  stable  euro  area  within  the  Union 

framework; 

  For the period 2018-2020, (1) targeted changes in the Common Provisions Regulation to mobilise 
EU funds in support of national reforms and (2) a proposal to strengthen the Structural Reform 
Support Programme; 

  A Communication on a European Minister of Economy and Finance. 

A proposal for the establishment of a European Monetary Fund  

This  proposal  builds  on  the  well-established  structure  of  the  European  Stability  Mechanism  by 
creating  a  European  Monetary  Fund  anchored  within  the  EU's  legal  framework.  This  was  already 
announced  in  the  Five  Presidents'  Report  and  has  also  been  called  for  by  the  European  Parliament, 
which stressed the need for the European Monetary Fund to be equipped with adequate lending and 
borrowing capacities and a clearly defined mandate.14  

The European Stability Mechanism was set up in October 2012 at the height of the crisis. The pressure 
of events at the time led to an intergovernmental solution being found. However, it was already clear 
then  that  this  could  also  be  achieved  within  the  framework  of  the  EU  Treaties,  as  indicated,  for 
instance, in the Commission's Blueprint for a Deep and Genuine Economic and Monetary Union.15    

Over  the  years,  the  European  Stability  Mechanism  has  proven  decisive  in  helping  to  preserve  the 
financial stability of the euro area. It has done so by providing additional financial support to euro area 
Member States in distress. Its transformation into a European Monetary Fund will further strengthen 
its institutional anchoring. It will help to create new synergies within the EU framework, notably in 
terms  of  transparency,  legal  review  and  efficiency  of  the  EU's  financial  resources  and  thus  offering 
better  support  to  Member  States.  It  will  also  help  improve  further  the  cooperation  with  the 
Commission  and  accountability  to  the  European  Parliament.  This  will  be  done  without  affecting  the 
way  in  which  national  governments  are  held  to  account  by  their  own  national  Parliaments  and 
preserving the commitments of the existing European Stability Mechanism. 

14  European  Parliament's  resolution  of  16  February  2017  on  a  budgetary  capacity  for  the  euro  area 

(2015/2344(INI)).  

15   COM(2012)777 “Blueprint for a Deep and Genuine Economic and Monetary Union”,  28 November 2012.  

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The initiative takes the form of a proposal for a Council Regulation, which is subject to the consent of 
the European Parliament, under Article 352 of the Treaty on the Functioning of the EU. Article 352 
allows  for  the  integration  of  the  European  Stability  Mechanism  into  the  Union  framework,  as  this 
action is necessary for the  financial stability of the euro area16 and the Treaties have not provided 
any other legal basis for the EU to reach this precise objective.17 Paragraph 2 of that Article explicitly 
foresees  a  role  for  national  Parliaments.  Historically,  several  significant  decisions  paving  the  way 
towards  the  establishment  of  the  Economic  and  Monetary  Union  have  been  based  on  the  equivalent  
of  Article  352.  For  instance,  decisions  on  the  European  Monetary  Cooperation  Fund,  the  European 
Currency  Unit  and  the  first  balance  of  payment  mechanisms  were  taken  under  Article  235  of  
the Treaty on the European Economic Community, the predecessor to Article 352.   

The  proposal  is  complemented  by  a  draft  of  what  could  become  an  intergovernmental  agreement  
for euro area Member States to agree among themselves on the transfer of funds from the European 
Stability Mechanism to the European Monetary Fund. This also foresees that the Fund would succeed 
to and replace the ESM, including in its legal position, with all its rights and obligations. 

Under  today's  proposal,  the  European  Monetary  Fund  will  be  established  as  a  unique  legal  entity 
under  Union  law.  It  will  succeed  the  European  Stability  Mechanism,  with  its  current  financial  and 
institutional  structures  essentially  preserved.  This  means  that  the  European  Monetary  Fund  will 
continue  to  provide  financial  stability  support  to  Member  States  in  need,  to  raise  funds  by  issuing 
capital  market  instruments  and  to  engage  in  money  market  transactions.  The  membership  will  not 
change and the participation of additional Member States will remain possible, once they join the euro.  

Given that the European Monetary Fund would become a Union body, some targeted adjustments are 
necessary  to  the  current  structure  of  the  European  Stability  Mechanism.  These  are  explained  in  the 
explanatory  memorandum  to  the  Regulation.  They  include  an  endorsement  by  the  Council  of 
discretionary decisions taken by the European Monetary Fund.18  

In addition, today’s proposal adds a limited number of new features. 

First,  the  European  Monetary  Fund  will  be  able  to  provide  the  common  backstop  to  the  Single 
Resolution  Fund.  This  is  an  essential  component  of  the  second  pillar  of  the  Banking  Union-  
the Single Resolution Mechanism.19  

16  The necessity of having a body such as the European Stability Mechanism to safeguard the stability of the 
euro area is based on factual elements and confirmed by Article 136(3) Treaty on the Functioning of the EU,  
as well as the second recital of the European Stability Mechanism Treaty, which refer to the current ESM as 
"a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole". 
17  The  European  Court  of  Justice  has  already  considered  the  possibility  that  Article  352  could  be  used  
to  establish  a  Union  body  in  charge  of  providing  financial  support  to  ensure  stability  of  the  euro  area.  
See  “Pringle  case”-  judgment  of  27  November  2012,  Case  C-370/12,  EU:C:2012:756,  paragraph  67.  
As indicated in footnote 15, the 2012 Commission Blueprint also mentioned the possible use of Article 352.  
18  This will ensure compliance with the “Meroni doctrine”. The Meroni doctrine, which arose from Cases H-
9/56  and  H-10/56  (Meroni  v  High  Authority  [1957/1958]  ECR  133),  relates  to  the  extent  to  which  EU 
Institutions may delegate their tasks to regulatory agencies. In the context of today's proposal, it should be 
borne  in  mind  that  the  endorsement  by  the  Council  of  discretionary  decisions  taken  by  the  Boards  of  the 
European Monetary Fund will be simplified by the fact that the composition of its Board of Governors is the 
same as that of the Eurogroup. 

19  Regulation (EU) No 806/2014. The Single Resolution Board (SRB) is the resolution authority for large and 
systemic  banks  in  the  euro  area,  operational  since  January  2016.  The  Single  Resolution  Fund  (SRF)  is 

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When the Single Resolution Mechanism was adopted in 2013, Member States also agreed to develop a 
backstop to the Single Resolution Fund. This was meant as a last resort to be activated if the Single 
Resolution  Fund's  immediately  available  resources  proved  to  be  insufficient  for  capital  or  liquidity 
purposes. Member States also agreed that it should be fiscally neutral over the medium term so that 
any potential deployment of the backstop would be recovered from the banking sector in the euro area.  

New  EU  rules  on  banking  supervision  and  resolution  developed  in  the  aftermath  of  the  crisis  have 
significantly reduced the likelihood and potential impact of bank failures. However, a common fiscal 
backstop continues to be needed to enhance the financial capacity of the Single Resolution Fund. Such 
a  backstop  would  instil  confidence  in  the  banking  system  by  underpinning  the  credibility  of  actions 
taken by the Single Resolution Board. In turn, this would actually reduce the likelihood of a situation 
in which a backstop would need to be called on.  

There is now wide consensus that the European Stability Mechanism – the future European Monetary 
Fund – is best placed to provide such a backstop in the form of a credit line or guarantees to the Single 
Resolution Fund. This is reflected in today's proposal which also sets out appropriate decision-making 
processes  to  ensure  that  the  backstop  can  be  deployed  quickly,  if  needed.  Special  arrangements  are 
also  proposed  to  cater  for  the  legitimate  interests  of  non-euro  Member  States  having  joined  the 
Banking Union.  

Second,  in  terms  of  governance,  the  proposal  includes  the  possibility  for  faster  decision-making  in 
specific urgent situations. It is proposed to keep unanimity voting for all major decisions with financial 
impact  (e.g.  capital  calls).  However,  reinforced  qualified  majority,  in  which  85%  of  the  votes  are 
required,  is  proposed  for  specific  decisions  on  stability  support,  disbursements  and  the  deployment  
of the backstop.  

Third, as regards the management of financial assistance programmes, the proposal foresees a more 
direct involvement of the EMF, alongside the European Commission. 

Fourth,  the  proposal  refers  to  the  possibility  for  the  European  Monetary  Fund  to  develop  new 
financial instruments. Over time, such instruments could supplement or support other EU financial 
instruments  and  programmes.  Such  synergies  could  prove  particularly  useful  if  the  European 
Monetary Fund were to play a role in support to a possible stabilisation function in the future. 

With these changes, the European Monetary Fund will establish itself as a robust crisis management 
body within the Union framework, working in full synergy with other EU institutions. The Council 
and the Commission will retain their competences and responsibilities in terms of economic and fiscal 
surveillance and policy coordination, as set out in the EU Treaties.  

Practical  cooperation  can  also  be  stepped  up  to  serve  Member  States  better,  engage  with  market 
participants and avoid the duplication of activities. Further cooperation could be sought in the light of 
further progress towards the strengthening of Economic and Monetary Union. 

financed  via  contributions  from  the  euro  area  banking  sector.  It  may  be  used  to  finance  resolution  costs, 
provided  that  all  conditions  of  the  regulatory  framework  are  met,  including  the  bail-in  of  8%  of  total 
liabilities of the bank concerned.  

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A proposal to integrate the substance of the Treaty on Stability, Coordination and Governance into the 
Union  legal  framework,  taking  into  account  the  appropriate  flexibility  built  into  the  Stability  and 
Growth Pact and identified by the Commission since January 2015 

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union is 
an  intergovernmental  Treaty  signed  by  25  EU  Member  States.20  It  complements  the  EU  fiscal 
framework, including the Stability and Growth Pact.  

Today's proposal  implements its Article 16 in which all the contracting parties legally committed to 
taking steps to incorporate the substance of that Treaty into Union law within five years after its entry 
into  force,  which  corresponds  to  1  January  2018.21  It  should  be  recalled  that  at  the  time  of  the 
negotiation  of  the  Treaty,  notably  the  European  Parliament  and  the  Commission  insisted  on  its 
incorporation under EU law within a defined timeframe, which Member States accepted in Article16. 

As  with  the  European  Stability  Mechanism,  the  decision  to  establish  the  Treaty  on  Stability, 
Coordination and Governance in the Economic and Monetary Union as an intergovernmental Treaty in 
2012  must  be  seen  in  the  context  of  the  circumstances  at  the  time.  However,  both  the  commitment 
taken under Article 16 and the fact that subsequent legislation (known as the "two-pack") has already 
incorporated many of its elements under EU law, show that the intention of finding Union solutions 
has been present from the beginning. Bringing the substance of the Treaty on Stability, Coordination 
and  Governance  under  EU  law  has  also  been  repeatedly  called  for  by  the  European  Parliament,22 
arguing that, to be effectively legitimate and democratic, the governance of a genuine Economic and 
Monetary Union must be placed within the institutional framework of the Union. 

Today's initiative takes the form of a proposal for a Council Directive, which requires consultation of 
the European Parliament, under Article 126(14)(2) of the Treaty on the Functioning of the EU. This is 
the only available legal basis in the Treaty. The Commission will take due account of the views of the 
European Parliament in the process. The proposal applies to all euro area Member States and includes 
“opt-in” provisions for non-euro Member States.  

The proposed Directive integrates the essence of Article 3 of the Treaty on Stability, Coordination and 
Governance, which forms part of the so-called Fiscal Compact. This Article requests that a balanced 
budget  rule  in  structural  terms  should  be  applied,  along  with  a  correction  mechanism  in  case  of 
significant  deviation.  As  reported  by  the  Commission  earlier  this  year,23  the  provisions  under  this 
Article have already been enacted into national laws. 

20   Austria,  Belgium,  Bulgaria,  Cyprus,  Germany,  Denmark,  Estonia,  Spain,  France,  Greece,  Hungary,  Italy, 
Ireland,  Lithuania,  Luxembourg,  Latvia,  Malta,  Netherlands,  Portugal,  Poland,  Romania,  Sweden,  Finland, 
Slovenia and Slovakia.  

21   Article  16  of  the  Treaty  on  Stability,  Coordination  and  Governance  in  the  Economic  and  Monetary  Union 
states  that  "within  five  years,  at  most,  of  the  date  of  entry  into  force  of  this  Treaty,  on  the  basis  of  an 
assessment of the experience with its implementation, the necessary steps shall be taken, in accordance with 
the Treaty on the European Union and the Treaty on the Functioning of the European Union, with the aim of 
incorporating the substance of this Treaty into the legal framework of the European Union." 

22   European Parliament resolution of 12 December 2013 on constitutional problems of a multitier governance in 
the  European  Union  (P7_TA(2013)0598)  and  resolution  of  24  June  2015  on  the  review  of  the  economic 
governance framework: stocktaking and challenges (P8_TA(2015)0238). 

23   COM(2017) 1201 final, 22 February 2017. 

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Integrating  the  Fiscal  Compact  into  Union  law  will  simplify  the  legal  framework  and  allow  for 
continuous  and  improved  monitoring  as  part  of  the  overall  EU  economic  governance  framework.  
In  particular,  this  will  complement  and  strengthen  the  existing  fiscal  frameworks,  which  aim  to 
achieve  convergence  to  prudent  levels  of  public  debt.  At  the  same  time,  the  proposal  takes  into 
account  the  appropriate  flexibility  built  into  the  Stability  and  Growth  Pact  and  identified  by  the 
Commission since January 2015.24 The provisions are therefore fully in line with existing rules defined 
in primary and secondary legislation.  

The  proposal  also  stresses  the  value  and  maintains  the  practice  of  inter-parliamentary  meetings  held 
annually  by  the  European  Parliament,  as  well  as  the  voting  arrangements  among  contracting  parties 
listed in the Treaty on Stability, Coordination and Governance.  

A Communication on new budgetary instruments for a stable euro area within the Union framework 

In  his  State  of  the  Union  address,  President  Juncker  stressed  that  there  was  no  need  for  parallel 
structures: “we do not need a budget for the euro area but a strong euro area budget line within the 
EU budget”. The Reflection Papers on the deepening of the Economic and Monetary Union  and  
on the future of EU finances described the common challenges for the modernisation of EU public 
finances  in  general  and  for  the  particular  needs  of  the  euro  area.  Today's  Communication  sets  out  a 
vision  of  how  certain  budgetary  functions  that  are  essential  for  the  euro  area  and  the  EU  as  
a whole can be developed within the framework of the EU public finances of today and tomorrow.  

The Communication recalls what  can be achieved within the current financial  framework of the EU 
and presents several ideas and options, some of which pave the way for the upcoming proposals for 
the post-2020 Multiannual Financial Framework.  

The  Communication  discusses  four  specific  functions  that  are  essential  for  the  deepening  of  the 
Economic and Monetary Union. It proposes concrete next steps for each of them:  
  Support to structural reforms through: 1) a reform delivery tool to support reform commitment 
packages agreed with Member States and 2) technical support at the request of Member States; 

  A dedicated convergence facility for Member States on their way to joining the euro; 
  A  backstop  for  the  Banking  Union,  through  the  European  Stability  Mechanism/European 

Monetary Fund, as explained above; 

  A stabilisation function, bringing together different EU and euro area level funds and financial 
instruments, to be used to maintain investment levels in the event of large asymmetric shocks. 

For the period 2018-2020, the Commission intends to develop some of these ideas and to test them in 
practice to support structural reforms and capacity building. To that end, the following initiatives are 
presented alongside this package:  
  A  proposal  to  amend  the  Common  Provisions  Regulation,  as  explained  below,  in  order  to 
extend the possibilities to use the performance reserve built into the existing European Structural 
and Investment Funds.  

  A proposal to strengthen the Structural Reform Support Programme, as explained below, to 
boost technical support available for all Member States and to create a dedicated work stream to 
support non-euro Member States in their convergence process. 

24   COM(2015) 12, 13 January 2015. 

8 

 
 
 
 
 
 
 
 
                                                            
The other proposals mentioned here will follow in the context of the post-2020 Multiannual Financial 
Framework, for which detailed proposals will be presented in  May 2018. The Commission will take 
full account of the feedback received by then. 

Targeted changes to the Common Provisions Regulation 

With a view to preparing for the new reform delivery tool mentioned above, the Commission proposes 
to test a new tool of budgetary support in a pilot phase for the period 2018-2020. This proposal takes 
the form of targeted amendments to the Common Provisions Regulation.25 Its aim is to offer additional 
flexibility in the use by Member States of the performance reserve of the European Structural and 
Investment Funds. It will be up to each Member State to decide whether it intends to allocate parts of 
its performance reserve to this new scheme. 

The aim of this tool will be to support the implementation of national reforms, which will be identified 
through  the European  Semester  of  economic  policy  coordination  and built  into  the  National  Reform 
Programmes presented by the Member States. Once the reform commitments of a Member State are 
agreed,  with clearly  defined  targets  and  milestones,  the  Commission  will  monitor  and  evaluate  their 
implementation before the disbursement of support.  

The  proposal  does  not  modify  the  overall  level  of  expenditure  for  the  European  Structural  and 
Investment  Funds  in  the  current  Multiannual  Financial  Framework.  The  lessons  learned  from  the 
initiative will inform the proposals for the post-2020 period. 

A proposal to strengthen the Structural Reform Support Programme 

Following the Five President's Report, the Commission established the  Structural Reform Support 
Service in late 2015. The aim of this Service is to provide technical support to Member States in order 
to  assist  in  the  design  and  implementation  of  specific  reforms  or  to  reinforce  their  overall  reform 
capacity.  The  programme  has  proven  particularly  successful  in  helping  Member  States  to  design 
reforms for the modernisation of the public administration and the business environment. It has now 
become clear that the demand for this type of technical assistance by far exceeds the funding that had 
initially been made available through the Structural Reform Support Programme.26 

At the same time, as stated by President Juncker in his State of the Union address, there is a clear need 
to think ahead and support non-euro Member States in preparing for their euro accession when they so 
desire.  One  of  the  lessons  learned  from  the  crisis  is  that  achieving  convergence  and  building  robust 
economic  structures  is  crucial  for  the  prosperity  of  the  Union  and,  in  particular,  for  the  smooth 
functioning of the single currency.  

25   Regulation  (EU)  No  1303/2013  laying  down  common  provisions  on  the  European  Regional  Development 
Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development 
and  the  European  Maritime  and  Fisheries  Fund  and  laying  down  general  provisions  on  the  European 
Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and 
Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320–469). 
26   The Structural Support Programme (SRSP) was established in May 2017 to support financially the activities 

of the Structural Reform Support Service.   

9 

 
 
 
 
 
 
 
 
 
                                                            
Dedicated  technical  support  to  non-euro  Member  States  can  prove  useful  to  contribute  to  the 
process of real convergence. This is notably true in areas such as public financial management, public 
administration, the financial sector, and labour and product markets. 

For these two reasons, the Commission is today presenting an amendment to the Structural Reform 
Support  Programme  Regulation.27  Its  objective  is  to  double  the  funding  available  for  technical 
assistance activities by 2020, thus bringing it to EUR 300 million for the period 2017-2020. Lessons 
learned will inform the proposals for the post-2020 period.  

A Communication on a European Minister of Economy and Finance 

In  his  State  of  the  Union  address,  President  Juncker  backed  the  idea  of  a  European  Minister  of 
Economy  and  Finance.  In  keeping  with  the  logic  that  form  follows  function,  the  Minister  will  be 
instrumental in strengthening the coherence, efficiency, transparency and democratic accountability of 
EU economic governance. It is also important to note that the merging of the function of a responsible 
Commissioner,  possibly  a  Vice-President  of  the  Commission,  with  that  of  the  President  of  the 
Eurogroup is already possible under the current EU Treaties.28   

The current architecture of the Economic and Monetary Union is intrinsically complex. Competences, 
functions  and  instruments  are  carried  out  by  different  bodies,  within  various  and  sometimes 
overlapping  legal  frameworks.  This  is  sub-optimal  for  EU  citizens  and  decision-makers  alike,  
as it hampers the ability to articulate and stand up for the common economic interest of the EU and  
of  the  euro  area  in  particular.  This  need  has  been  increasingly  felt  over  the  years  as  the  euro  has 
become a leading international currency and several dimensions of the Economic and Monetary Union 
are  being  strengthened.  This  is  also  one  of  the  reasons  behind  the  fact  that  this  Commission  has 
strengthened  its  internal  coordination  capacities  by  assigning  new  horizontal  roles  to  its  Vice-
Presidents to coordinate several economic, financial and social policy portfolios. 

Today's  Communication  looks  to  the  future  and  sets  outs  how  certain  existing  functions  could  be 
combined under a European Minister in order to pursue the general interest of the EU and euro area 
economy,  to  strengthen  policy  coordination  and  to  deliver  an  improved  policy  mix  at  all  levels.  
The  European  Minister  would  also  oversee  the  use  of  EU  and  euro  area  budgetary  instruments  and 
seek to maximise their impact in support of shared priorities.  

The  Communication  also  spells  out  the  potential  institutional  setting  in  which  the  Minister  would 
operate.  The  Minister  would  strengthen  the  European  dimension  of  economic  policy-making  and 
ensure strong parliamentary scrutiny at EU level, without calling into question national competences. 
By combining existing functions and available expertise at EU level, the Minister would contribute to 
a  more  efficient  governance  framework,  which  should  complement  and  facilitate  the  exercise  of 
national competences, also in their interaction at EU level. 

27   Regulation  (EU)  No  2017/825  on  the  establishment  of  the  Structural  Reform  Support  Programme  for  the 
period  2017  to  2020  and  amending  Regulations  (EU)  No  1303/2013  and  (EU)  No  1305/2013  (OJ  L 
19.05.2017, p. 129). 

28   Article  2  of  Protocol  No  14  on  the  Euro  Group,  annexed  to  the  Treaty  on  the  European  Union  and  to  the 
Treaty  on  the  Functioning  of  the  European  Union,  establishes  the  rules  for  electing  the  President  of  the 
Eurogroup. There is no incompatibility between this role and that of a member of the Commission.   

10 

 
 
 
 
 
 
 
 
 
                                                            
The establishment of such a position could be pursued sequentially. The role of the Minister as Vice-
President  of  the  Commission  could  be  established  as  part  of  the  appointment  of  the  next 
Commission  as  from  November  2019.  For  him  or  her  to  chair  the  Eurogroup,  the  latter  could 
informally agree to elect the Minister as its President for two consecutive mandates, thus agreeing on 
the alignment of its mandate with the mandate of the Commission.  

3.  A ROADMAP FOR DEEPENING THE ECONOMIC AND MONETARY UNION  

Moving from general principles to practical implementation requires a determined sense of direction 
and  appropriate  sequencing.  Following  the  Five  Presidents’  Report,  the  Reflection  Paper  on  the 
deepening  of  the  Economic  and  Monetary  Union  set  out  a  roadmap  for  the  completion  of  the 
Economic and Monetary Union by 2025, which remains relevant.  

Today’s  package  is  part  of  this  broader  agenda.  It  adds  to  steps  already  taken  and  still  to  come. 
Overall,  progress  is  needed  in  four  complementary  areas:  1)  Financial  Union;  2)  Fiscal  Union;  
3) Economic Union and 4) democratic accountability and strengthened governance. 

To  take  the  first  steps,  it  is  important  to  know  the  direction  and  to  see  the  path  ahead.  As  a  way  to 
structure the work ahead, this Communication identifies the initiatives to be discussed and agreed by 
the EU co-legislator over the next eighteen months. This roadmap is also presented in an appendix and 
the main elements are recalled below. It also sets out a possible path to 2025. 

Financial Union 

The  establishment  of  the  Banking  Union  and  the  Capital  Markets  Union  have  considerably  reduced 
remaining risks in the EU financial sector, changed its fundamentals and contributed to its solidity and 
resilience. However, remaining parts of this work need to be completed swiftly.  

The Commission Communication on completing the Banking Union, published in October 2017,29 
includes a pragmatic path for a swift agreement on outstanding issues. This specific roadmap is also 
reproduced  in  an  appendix.  This  includes  first  and  foremost  the  completion  of  the  risk-reduction 
agenda  to  strengthen  further  the  resilience  of  EU  banks.  A  number  of  initiatives  currently  under 
negotiation in the European Parliament and the Council, notably the Commission's banking package 
from November 201630, as well as the proposal on business insolvency and restructuring, need to be 
agreed  in  2018.  Determined  progress  is  also  necessary  in  the  context  of  ongoing  national  and 
European  work  with  regard  to  non-performing  loans,  which  remain  a  challenge  in  parts  of  the 
banking  sector.31  In  parallel,  the  proposal  for  a  European  Deposit  Insurance  Scheme32  should  be 
agreed  upon by  the  co-legislators  by  the  end  of  2018.  The proposal  for  a  common  backstop  to  the 
Single  Resolution  Fund  should  be  politically  agreed  by  mid-2018,  with  a  view  to  its  quick 
operationalisation by 2019.  

29   COM(2017) 592 final, 11 October 2017. 
30   Commission proposals of 23 November 2016 amending the following pieces of legislation: Regulation No 
575/2013, Directive 2013/36/EU, Directive 2014/59/EU and Council implementing regulation 2015/81 of 19 
December 2014.  

31   See for example ECOFIN conclusions on non-performing loans in the Banking Sector (doc. 9854/17). 
32   COM(2015) 586 final, 24 November 2015. 

11 

 
 
 
 
 
 
 
 
 
 
                                                            
At  the  same  time,  all  actors  –  EU  Institutions,  Member  States,  supervisory  authorities  and  market 
operators  across  Europe  –  should  step  up  their  work  to  make  the  Capital  Markets  Union  a  reality  
so  that  deep  and  well-integrated  capital  markets  can  play  their  role  as  shock-absorbers  and  efficient 
channels  for  private  risk-sharing,  while  at  the  same  time  improving  access  to  finance,  in  particular  
for start-ups and companies.  

The Commission is supportive of the current work in the European Systemic Risk Board on European 
Sovereign  Bond-backed  Securities  and  will  present  an  enabling  framework  for  such  securities  
in spring 2018.  

Fiscal Union 

As part of the European Semester of economic policy coordination, the Commission will continue to 
work  towards  responsible  fiscal  policy  at  national  level,  by  supporting  the  establishment  of  sound 
fiscal frameworks and paying appropriate attention to debt levels.  

Policy guidance will continue to take account of what makes economic and budgetary sense both for 
the  countries  concerned  and  for  the  euro  area  as  a  whole,  at  the  particular  juncture  of  the  economic 
cycle. The Commission will continue to apply the rules of the Stability and Growth Pact by making 
use of its inbuilt flexibility in support of reforms and investment. It will also continue to put the focus 
on the priorities of the euro area as a whole, notably in terms of the aggregate fiscal stance, in line 
with the annual Recommendation for the economic policy of the euro area.33  

Beyond these aspects, as explained above, the post-2020 Multiannual Financial Framework will be 
a key opportunity to modernise the Union public finances and find new synergies in order to support 
national  reform  and  investment  efforts,  as  well  as  to  cushion  large  asymmetric  shocks.  The 
Commission intends to make a proposal for the creation of a stabilisation function in May 2018, to 
be  fully  developed  over  time,  as  part  of  the  proposals  for  the  post-2020  Multiannual  Financial 
Framework.  

Finally,  the  need  to  capture  the  diversity  of  economic  circumstances,  which  was  particularly 
pronounced during the crisis years, has brought more sophisticated but also more complex fiscal rules 
at  EU  level  over  time.  At  times,  this  can  play  against  national  ownership  of  reforms  and  effective 
implementation. Stronger economic, fiscal and financial integration, together with market discipline, 
should  pave  the  way  for  a  review  of  the  EU  fiscal  rules  in  the  longer  term,  with  the  aim  of  a 
substantial simplification by 2025. 

Economic Union 

The  notions  of  convergence  and  integration  are  at  the  heart  of  the  Economic  Union.  To  achieve 
sustainable  prosperity,  Member  States  need  to  continue  to  focus  on  the  necessary  reforms  to 
modernise  their  economies,  make  them  more  resilient  to  possible  shocks  and  improve  their  growth 
prospects.  Reform  priorities  are  discussed  and  monitored  on  an  annual  basis  in  the  context  of  the 
European Semester of economic policy coordination. 

33   See for instance COM(2016) 726 final, 16 November 2016 and COM(2017) 770 final, 22 November 2017.  

12 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Going  forward,  the  Union  framework  should  continue  to  support  a  process  of  reforms  for  real 
convergence  across  the  EU,  both  within  the  euro  area  and  for  countries  on  their  way  to  joining  the 
euro. As explained above, the Commission will start with pilot actions for the period 2018-2020 and 
will  present  dedicated  proposals  to  support  agreed  reforms  in  May  2018  in  view  of  the  post-2020 
Multiannual  Financial  Framework.  This  should  be  agreed  before  the  next  European  Parliament 
elections. 

In addition, the proposal to strengthen the budget of the Structural Reform Support Programme 
for  the  next  two  years  will  need  to  be  adopted  by  the  European  Parliament  and  Council  in  2018. 
Among  other  tasks,  a  dedicated  work  stream  will  be  developed  to  provide  tailor-made  assistance  to 
countries  that  plan  to  adopt  the  euro  over  a  defined  time  horizon.  Looking  beyond  2020,  the 
Commission  intends  to  propose  a  continuation  of  the  Structural  Reform  Support  Programme. 
This will also include a dedicated convergence facility for non-euro Member States. 

Finally,  further  strengthening  of  coordination  of  national  economic  policies  is  important  for 
convergence. The annual process of policy coordination will continue to be linked with a more multi-
annual approach to reforms initiated by national governments. In so doing, it will also be important 
to keep a strong social dimension to all activities. The principles and rights of the European Pillar of 
Social Rights, which was proclaimed in Gothenburg on 17 November 2017, will provide a compass 
for renewed convergence towards better working and living conditions.34 Moreover, ongoing work in 
the  Council  and  in  the  Eurogroup  on  the  benchmarking  of  policies  and  the  identification  of 
convergence standards should be reinforced during the next 18 months.  

Democratic accountability and strengthened governance 

As explained above, the integration of both the European Stability Mechanism and the Treaty on 
Stability, Coordination and Governance under the Union framework by mid-2019 will be useful 
steps to strengthen institutional efficiency, transparency and accountability.  

The  European  Parliament  and  national  Parliaments  should  be  equipped  with  sufficient  powers  of 
oversight.  The  Commission  has  developed  an  effective  regular  dialogue  with  the  European 
Parliament  on  EU  and  euro  area  economic  policy  matters  in  recent  years.  In  the  light  of  today's 
proposals, these practices could be formalised by the two institutions by the end of 2018.  

Moreover, the establishment of a European Minister of Economy and Finance could be considered 
as  part  of  the  appointment  of  the  next  Commission  as  from  November  2019,  with  the  Eurogroup 
electing  the  Minister  as  its  President  for  two  consecutive  mandates.  In  parallel,  stronger  internal 
coordination  on  Economic  and  Monetary  Union  matters  should  be  mirrored  by  a  more  unified 
external representation of the euro area, as proposed by the Commission in 2015.35 

34   The  adoption  of  the  Pillar  was  complemented  by  the  establishment  of  a  Social  Scoreboard,  which  will  be 
integrated  in  the  2018  European  Semester  and  serve  as  a  reference  framework  for  the  monitoring  of 
employment and social performance. 
35   COM(2015) 603 final, 21 October 2015. 

13 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
4.  CONCLUSIONS 

The  package  presented  today  constitutes  further  important  steps  for  the  deepening  of  Europe's 
Economic  and  Monetary  Union,  which  is  also  an  essential  element  on  the  way  to  a  More  United, 
Stronger  and  More  Democratic  Union.  Building  on  the  Leaders'  Agenda,  concrete  decisions  are 
expected  in  the  coming  months.  In the view  of  the  Commission,  a  roadmap  should  be  agreed  upon, 
which should include the following steps over the next 18 months: 

By mid-2018: 

 

 

 

 

adoption  of  the  necessary  legal  acts  to  complete  the  Banking  Union,  including  the  2016 
November risk-reduction package to strengthen the resilience of EU banks. In parallel, work on 
proposals relating to the Capital Markets Union needs to continue. 

agreement  on  a  common  backstop  for  the  Single  Resolution  Fund  with  a  view  to  its  quick 
operationalisation by 2019.  

adoption  of  the  amending  proposal  to  double  the  activities  of  the  Structural  Reform  Support 
Programme by 2020. 

adoption  of  the  targeted  changes  to  the  Common  Provisions  Regulation  in  support  of  the 
implementation of national reforms. 

By the end of 2018: 

 

 

adoption of the proposal on the European Deposit Insurance Scheme. 

formalisation of dialogue practices between the European Parliament and the Commission.  

By mid-2019: 

 

 

 

 

adoption  of  the  proposals  leading  to  (1)  the  establishment  of  a  European  Monetary  Fund,  
(2)  the  incorporation  of  the  Treaty  on  Stability,  Coordination  and  Governance  into  Union 
law and (3) the establishment of unified representation of the euro area in the International 
Monetary Fund.  

a common understanding  on the role of a European Minister of Economy and Finance in the 
context of the next Commission, with the Eurogroup agreeing to elect the Minister as its President 
for two consecutive mandates.  

conclusion of the discussions on pending proposals to improve the functioning of the euro area 
and  adopt  in  the  context  of  the  next  Multiannual  Financial  Framework:  (1)  proposals  for 
structural reform support, (2) a dedicated convergence facility for non-euro Member States, 
(3) a stabilisation function.  

finalisation  of  all  pending  legislative  initiatives  for  the  Capital  Markets  Union,  including  the 
review  of  the  European  Supervisory  Authorities,  all  changes  to  the  European  Markets 
Infrastructure Regulation and the Pan-European Pension Product. 

While  progressing  on  all  these  fronts,  it  will  be  important  to  have  a  clear  sense  of  direction  for  the 
period  2019-2024,  with  a  view  to  deepening  Europe's  Economic  and  Monetary  Union  by  2025. 
The roadmap in appendix 1 recalls the main steps that would still be necessary beyond 2019, building 
on the Reflection Paper on the deepening of the Economic and Monetary Union. These steps should be 
part of the common understanding to be reached by mid-2018.  

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appendix 1: A roadmap for deepening Europe's Economic and Monetary Union  

*  For  more  details,  see  the  Reflection  Paper  on  the  deepening  of  the  Economic  and  Monetary  Union  of  31  May  2017 
Source: European Commission 

15 

 
 
     
Appendix  2:  Roadmap  on  completing  the  Banking  Union  by  2018  –  abstract  from  the 
Commission Communication of 11 October 2017   

Source: European Commission 

16