“We have to keep advancing despite the contradictions.” With these words, former Spanish Minister of Economy Pedro Solbes expressed his confidence in the reform process of the Economic and Monetary Union (EMU) at the most recent session of a series of debates organised by the Jean Monnet-ESADE Chair, the Foundation for Financial Studies and Uría Menéndez over the past academic year. The series, entitled “The Future of the Economic and Monetary Union”, aims to shed light on Europe’s prospects for financial, banking, fiscal and economic unification. “I share the idea of correcting the model,” commented Mr. Solbes, who is also a former European Commissioner for Economic and Monetary Affairs. “The more we can do for the model and for democracy, the better. However, we must bear in mind that the EMU, like any other integration process, is an evolutionary process and we cannot expect results in the short or medium term.”

Daniel Sarmiento, Lecturer of European Union Law at the Complutense University of Madrid and lawyer at Uría Menéndez, argued that the EMU has “governance problems, which we can characterise as design flaws or vulnerabilities: fragmentation between the countries on the inside and those on the outside; a lack of separation between monetary policy and economic policy; and poorly defined roles regarding who legislates, who executes and, most importantly, who controls.” He added: “We should act at fewer variable speeds and under the umbrella of the constitutive treaties, and these treaties need to be reformable and adaptable.” Finally, Mr. Sarmiento concluded: “Many problems would be solved if we could consolidate the situation of the eurozone, since banking integration must end with the monetary integration of the various countries.”

The future of the European Stability Mechanism

“More than design flaws, what’s happening with the EMU is that we need to complete the constitution process, for example by transferring its legal sovereignty and developing all the other policies that will be associated with it,” commented Carla Díaz Álvarez de Toledo, Deputy Director General of EU Economic and Financial Affairs at the Spanish Ministry of Economy. “We still need to know who the authority is in each of the areas in which the EMU operates.” She added: “We have advanced greatly in monetary policy, but not so much in financial policy and even less in fiscal policy. For these reasons and others, the European Stability Mechanism needs to be integrated into the treaties and the management of the EU.”

Alberto de Gregorio Merino, Director of the Legal Service of the Council of the European Union, argued in favour of incorporating the European Stability Mechanism into EU law. “In the coming days, we will see the European Stability Mechanism open up to renegotiating its authority to act as a fiscal barrier for the European resolution fund and to economically supervise the eurozone member states,” he commented, before adding: “The European Union is not an economic project but a political one.”

Federico Steinberg, Senior Analyst at the Royal Elcano Institute, agreed that the EMU should be viewed from a more global perspective: “The euro is in the hands of economists and, therefore, the concept of legitimacy, which we political scientists and jurists defend, tends to be neglected. We’re not always offered a seat at the table.” He added: “When the economy was doing well, there was no problem. But we have reached a point where we cannot avoid certain underlying questions: Who is the euro? Who is its sovereign? And what policies control it?”