Towards an inclusive economic union
To attain sustainable economic growth, the EU must work systematically to establish a more resilient capital market, a fully-fledged banking union and a robust crisis management framework. The EU also needs more transparent economic policy coordination. The ultimate responsibility for economic policies, however, rests with the member states.
Europe must invest now and in the coming years in technological innovations and in actions to mitigate climate change. Only a healthy banking sector can finance the investments needed. Determined efforts are therefore needed to reduce risks in the banking sector.
Finland’s Presidency aims to
- adopt an ambitious approach to completing the banking union, continuing discussions on issues such as risk reduction, the regulatory treatment of sovereign exposures and a common deposit insurance scheme
- strengthen the Economic and Monetary Union (EMU) by promoting risk diversification in the capital markets, thereby supporting the sustainability and resilience of the EMU
- promote sustainable and green finance as part of the EU’s climate action
- combat aggressive tax planning and tax evasion, and reduce harmful tax competition
- make sure that supervisors have sufficient powers in the fight against money laundering and terrorist financing.
Under the Finnish Presidency, discussions will also continue on a new budgetary instrument for the eurozone, a strengthened European Stability Mechanism and taxation of the digital economy.
General background: A framework for economic cooperation
Each EU member state is responsible for its own public finances. Despite this, the single market and the single currency integrate the individual member states’ economies closely. The member states are therefore committed to coordinating their economic policies.
The Economic and Monetary Union serves as the framework for economic cooperation and convergence between member states. All member states participate in the economic union: they form the single market and coordinate their economic policies. Only the countries that have adopted the single currency, the euro, participate in the monetary union.
Three milestones in the history of the EU’s Economic and Monetary Union (EMU):
- The EMU was established in 1992 under the Maastricht Treaty. The EMU is an integration process that covers the coordination of member states’ economic and fiscal policies, and involves a common monetary policy in the eurozone. The EU’s single currency, the euro, has been adopted by a majority of member states.
- Since the emergence of the debt crisis in the eurozone, measures have been taken to strengthen the EMU, for example by establishing a banking union that involves common rules for banks, common supervision of banks and common resolution. Negotiations are still in progress on a common deposit insurance.
- In recent years, the EMU has been developed further by taking the banking union forward and by strengthening the European Stability Mechanism (ESM). In addition, preliminary agreement has been reached on the main features of a eurozone budgetary instrument (a ‘eurobudget’).
Read more about important topics during Finland’s Presidency
EU2019FI backgrounder: Sustainable finance
EU2019FI backgrounder: Cross-border crowdfunding: new financing opportunities for businesses
Read more about the EU’s Economic and Monetary Union
Council of the EU: Deepening Europe’s Economic and Monetary Union
Council of the EU: Banking union
Council of the EU: Capital markets union