ceps forum : reconstructing the union emu governance : a reality check address by dr mario vella governor of the central bank of malta brussels, 23 february 2017 the five presidents ’ report on completing europe ’ s economic and monetary union argues that economic and political convergence underpinning emu needs to go deeper if it is to ensure prosperity for all its members and fairer outcome for its citizens. in the first phase, which was meant to be completed in june, the report envisages a number of steps including : − a new boost to convergence, employment and growth, through the creation of a euro area system of competitiveness authorities and stronger implementation of the macroeconomic imbalance procedure ; − the completion of the banking union and the launch of the capital markets union ; − the establishment of a new advisory european fiscal board ; − a reorganisation of the european semester, with greater parliamentary control and accountability. the commission should soon be publishing a related white paper on the future of europe. before moving forward, let ’ s see what ’ s been achieved so far. in the twenty - five years since the maastricht treaty was signed, the euro has been established a successful currency. it is widely accepted as a medium of exchange and store of value, not only within the euro area itself, but also beyond it. it enjoys popular acceptance and support. although the process of financial integration in the euro area was heavily disrupted in the aftermath of the global financial crisis in 2008 and the sovereign debt crisis in the euro area in 2011, the single currency area has held together. these gains should not be lightly discarded. but the double shock of the financial crisis and the subsequent fiscal crisis has hit emu hard. the euro area economy is currently in a moderate, gradual recovery that has been under way since the second quarter of 2013. however, in some member states that were hit the hardest by the sovereign debt crisis, output remains considerably below the levels registered in 2008. unemployment rates diverge considerably across the euro area, ranging from over 20 % in greece to below 4 % in germany. the euro area is facing pressure along four different fault lines. first, there is the tension between euro area member states that are in different cyclical and, in some cases, secular positions and yet face the same nominal interest rate and exchange rate. second, there is the related tension between monetary policy that is determined at the level of the euro area as a whole and fiscal policy which has remained, in effect,

: clear objectives, willingness to co - operate, and openness to “ newcomers ”. 1. from the beginning, europe has been set on a clear course and sailed with a clear mission. this is to achieve prosperity, peace, and stability for the citizens of europe. 2. member states work together as a team. they are willing to pool their specific abilities and national sovereignties. in a co - operative manner - unparalleled to any international organisation - they overcome differences and manage diversity. they share the conviction that they should find european solutions to european problems. the eurosystem is a perfect example for the co - operative approach that characterises the union. 3. europe has always been open for new member states. membership is neither limited nor exclusive. clear rules and procedures pave the way for newcomers to join the union. over time, the ship has grown in size and quality. new members joined and new competencies were acquired. in the nineties, the ship was given an important additional mast. this new mast is monetary union. its strong sails push the ship further. they reinforce the strength of the eu and generate stability. in the coming months, this ship will be restructured considerably and will expand its crew significantly. it is doing this at sea. the day - to - day work of the eu continues ; there is no break or pause that allows for practices or trial runs. the key challenge is to accomplish these tasks while keeping the three qualities. these qualities are worth maintaining. they have made the eu to what it is today. let me now concentrate on the first task, the constitution. the constitution the eu has diverted from its traditional path of recurring treaty reforms. it has decided to give itself a constitution. those of you who come from central and eastern european countries will be familiar with a process of adopting a constitution. in your countries the new constitutions have laid the foundation for an open society and democratic institutions. in the case of the eu, the new constitution does not signify the start of a new political era. why then has the eu embarked on a constitutional process? speaking as an outside observer to the process, it seems to me that the constitution is to serve two purposes. the first purpose is renovation. the eu has to be made fit for the future. it needs wellfunctioning decision - making procedures and effective institutions. this is not only in view of enlargement but also in order to adapt to new international demands and changing economic