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Last Updated: May 5th, 2008 - 21:54:38 |
EUobserver - The European Commission is this week to present an overview of the eurozone as it approaches its tenth anniversary amid strong differences between member states on the role of the European Central Bank.
The report is to look into ways of improving the economic functioning of economic and monetary union in response to growing
pressures such as globalisation and an ageing EU population.
The commission is expected to say that the single currency has contributed to macroeconomic stability in the eurozone as well as growth in employment.
EU leaders in May 1998 agreed to launch the euro on 1 January 1999 with 11 member states taking part. The ranks of the eurozone have now swelled to 15, including new member states Slovenia, Cyprus and Malta. Slovakia is expected to join next year.
In a recent speech, EU monetary affairs commissioner Joaquin Almunia suggested that in order to withstand global challenges, including the economic effects of climate change, there should be better economic surveillance in the euro area.
He also suggested that better fiscal surveillance should lead to improved budgetary discipline, including in good times, with governments regularly accused of not being prudent in anticipation of less well off times.
The commission is also expected to emphasise the importance of structural reforms in member states, as welfare states are expected to be hit by the effects of an ageing population.
"While the economy has been able to avoid major upheavals during the first decade of EMU, developments might be less benign in the next decade," said Mr Almunia last month referring to the importance of such reform.
The commission's paper is set to re-open controversial debate on the role of the European Central Bank.
The main goal of the bank is price stability. But its critics, which include most notably France and lately also Italy, say it does this to the exclusion of economic growth.
French President Nicolas Sarkozy has issued a number of broadsides at the bank, including suggesting that there be a mini summit on the eurozone, an idea that has since been shelved.
Meanwhile, incoming Italian leader Silvio Berlusconi has suggested the ECB have a "larger" role than fighting inflation, indicating that its policies focus on boosting economic growth.
Germany, on the other hand, has been a strong defender of the independence of the bank.
EU finance ministers are to discuss the proposals in June with the issue to continue to simmer throughout the second half of year as Paris has indicated it wants to examine the issue of eurozone governance during its EU presidency.
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