The recently published “Five Presidents’ Report” proposes a reform of the Economic and Monetary Union (EMU) along four dimensions: economic, financial, fiscal and political. This policy paper summarises Henrik Enderlein’s and Jörg Haas’ assessment of the proposals. In view of the political circumstances, it is a smart report. Compared to the 2012 Four Presidents’ Report, the document contains few entirely new insights, but it offers a clear timeline and sufficiently ambitious proposals for the near term.
A smart move: Why the Five Presidents’ Report is cautious on Substance and ambitious on Process
• The sections on financial and economic union are strong and constructive, whereas the ones on fiscal and political union are slightly weaker.
• A clear and specific three-stage roadmap may be the report’s most crucial element. It provides the EMU reform process with a structure. Putting short-term measures in the context of a long-term agenda is essential.
• Important substantial elements include 1) a drive to complete the Banking Union by mid-2017 and 2) a proposal to formulate binding “convergence indicators” that decide whether a country may accede to an EMU-wide shock-absorption mechanism.
• The report fails to discuss 1) improvements to the European Stability Mechanism’s governance and accountability and 2) measures to deal with a sovereign default in the euro area.
• Controversial elements of the report are to be specified by an expert group. We agree that a prominent and independent group could prepare the ground for a political agreement on the future of EMU.