Communication from the Commission to the European Parliament and the Council. Towards a deep and genuine economic and monetary union. The introduction of a convergence and competitiveness instrument

The Commission's Blueprint for a Deep and Genuine Economic and Monetary Union adopted on 28 November 2012 contained proposals for short-, medium- and long-term measures on how to strengthen cooperation and integration in the financial, fiscal, economic and also in the political fields. Among the issues to be implemented in the short run to complete the governance framework for economic policy coordination in general, and for the single currency in particular, were "contractual arrangements" combined with a solidarity mechanism for national structural reforms for competitiveness and growth whose lack of implementation would have a spillover effect on other Member States but whose implementation would need to be done by the Member State concerned under particular stress.

The aim is to help Member States facing a difficulty that may affect the entire Euro area to undertake the necessary reforms through the Convergence and Competitiveness Instrument (CCI), which is a combination of a contractual arrangement with a mechanism for financial support, sooner than they would be able to do on their own. On the basis of the Commission's Blueprint and the Four Presidents' Report on a genuine Economic and Monetary Union, the 2012 December European Council agreed on a roadmap for the completion of the EMU. Up until the 2013 June European Council, work will continue in the areas of: coordination of national reform, the social dimension of EMU including social dialogue, the feasibility and modalities of mutually agreed contracts, and a solidarity mechanism. In the December report of the Four Presidents the issues of contractual arrangements and a solidarity funding mechanism are also addressed separately.

The Convergence and Competitiveness Instrument, as proposed by the Commission, encompassed both the ideas of mutually agreed contracts and that of a solidarity mechanism. The inter-play between the two pillars would provide solidarity in the form of financial help to support increased economic responsibility and fiscal discipline which would be set out clearly and with conditions through "contractual arrangements". Specifically, a Convergence and Competitiveness Instrument would be based on two pillars:
- Contractual arrangements which would lay down the key measures a Member State commits to put in place, with agreed timelines. These measures would be designed to implement the Country Specific Recommendations agreed as part of the European Semester, in particular those emanating from the Macroeconomic Imbalance Procedure.
- Financial support for the implementation of the reforms in the contractual arrangement.

This Communication presents options and questions to elicit input from stakeholders on what should be the scope of the Convergence and Competitiveness Instrument, which Member States should be eligible, how it should be financed and how it should fit into the overall system of economic governance of the Euro area and the EU. The Communication aims to address these questions as part of the debate which is now underway between key stakeholders on the next steps towards the completion of the EMU, in particular the European Parliament, the Member States and the national parliaments.

See also:
- Communication from the Commission to the European Parliament and the Council - Towards a deep and genuine Economic and Monetary Union: Ex ante coordination of plans for major economic policy reforms

ESO: Background information: Commission sets out next steps towards a deep and genuine Economic and Monetary Union http://www.europeansources.info/record/press-release-commission-sets-out-next-steps-towards-a-deep-and-genuine-economic-and-monetary-union/

---