Economic reforms in the Euro area: Fiscal and macro-structural challenges

This paper highlights how recent successful stabilization efforts in the euro area have shifted the main policy challenge from 'acute crisis management' to fighting chronic stagnation. Critical policy challenges concerning euro area financial sector reforms and the upcoming banking sector balance-sheet assessment and stress test, as well as continuing efforts to reduce excessive inactivity levels are highlighted. To streamline the Country Specific Recommendations (CSRs), it is suggested that future recommendations should focus solely on structural reform issues, including banking sector reforms, and that budgetary surveillance should be left to dedicated EU procedures. Several proposals to enhance the role of the Euro Group President in promoting the CSRs agenda are also presented.