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Economic Governance Reform and Financial Stabilization in the EU and in the Eurosystem – Treaty-Based and Intergovernmental Decisions

Author

Listed:
  • Sylvia Gloggnitzer

    (Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division)

  • Isabella Lindner

    (Oesterreichische Nationalbank, European Affairs and International Financial Organizations Division)

Abstract

The institutional framework and the tools for economic governance provided by the Treaty of Lisbon were inadequate for preventing or resolving the recent banking and sovereign debt crisis in the EU. For instance, the Treaty did not provide any instruments for stabilizing euro area finances, and the existing economic governance instruments, such as the Stability and Growth Pact or the Broad Economic Policy Guidelines, were not applied adequately by the Member States. In addition, the institutional decision-making procedures foreseen by the Treaty proved too sluggish during the crisis. Therefore, most of the measures taken to remedy the situation were agreed through intergovernmental decision-making, with the European Council evolving as the key player in the governance process, rather than through standard EU procedures (with the “Community Method”). The deepening of euro governance, alongside the EU governance framework, resulted from the fact that the euro area required a coherent and efficient economic governance structure. The willingness to offer financial solidarity within the euro area correlates with the willingness of distressed Member States to implement sustainable national fiscal policies. To ensure the long-term success of the euro, the euro area will, however, have to adopt a common overall strategy that adds more value to its economic success as an entity.

Suggested Citation

  • Sylvia Gloggnitzer & Isabella Lindner, 2011. "Economic Governance Reform and Financial Stabilization in the EU and in the Eurosystem – Treaty-Based and Intergovernmental Decisions," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 36-58.
  • Handle: RePEc:onb:oenbmp:y:2011:i:4:b:2
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    References listed on IDEAS

    as
    1. Zsolt Darvas, 2011. "Debt Restructuring in the Euro Area: a Necessary but Manageable Evil?," Working Papers 1104, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
    2. Ansgar Belke, 2010. "Driven by the markets? ECB sovereign bond purchases and the securities markets programme," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 45(6), pages 357-363, November.
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    4. Athanassiou, Phoebus, 2009. "Withdrawal and expulsion from the EU and EMU: some reflections," Legal Working Paper Series 10, European Central Bank.
    5. Jürgen von Hagen & Jean Pisani-Ferry & André Sapir & Francois Gianviti & Anne O. Krueger, . "A European mechanism for sovereign debt crisis resolution- a proposal," Blueprints, Bruegel, number 446, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Christiane Kment & Isabella Lindner, 2014. "The EU’s Reformed Institutional Framework and the Way Forward," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 12-32.
    2. Daniel Seikel, 2016. "Flexible Austerity and Supranational Autonomy. The Reformed Excessive Deficit Procedure and the Asymmetry between Liberalization and Social Regulation in the EU," Journal of Common Market Studies, Wiley Blackwell, vol. 54(6), pages 1398-1416, November.

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    More about this item

    Keywords

    EU economic governance reform; financial stabilisation; Treaty of Lisbon; intergovernmental decision;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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