This chapter introduces economic and monetary union (EMU), describingthe key components of EMU and what happens when countries join. EMU was the result of decades of collaboration and learning, divided here into three periods: 1969–91, from the agreement to creation to its inclusion in the Treaty on European Union (TEU); 1992–2002, from having the plans for EMU to the irrevocable fixing of exchange rates; and 2002 onwards, with EMU established and euro banknotes and coins circulating in member states. The chapter reviews various theoretical explanations, both economic and political, for the creation of EMU and considers some criticisms of EMU. The chapter discusses how EMU has fared under the global financial crisis, the sovereign debt crisis, and the COVID-19 pandemic. These crises highlighted various imperfections in the design of EMU and provided opportunities for further development. This chapter discusses changes made since 2009 to address those flaws and what may be yet to come.
Edited by Dermot Hodson, Uwe Puetter, Sabine Saurugger, and John Peterson
The Institutions of the European Union is the key text for anyone wishing to understand the functions, powers, and composition of the EU’s institutions. Written and edited by a team of leading international experts, the text offers a comprehensive analysis and explanation of all the most important organizations and their roles in the governance and management of the EU. The fifth edition has been substantially revised, featuring a range of newly authored chapters and including coverage of the most important developments affecting the institutions of the European Union as they contend with the changing dynamics of European integration. Up-to-date chapters examine current challenges, including the rise of populism and how it is wielded by politicians to target EU institutions, the climate emergency, and the EU’s bold new policy commitments to make the Union climate neutral by 2050, as well as the response to the COVID-19 pandemic. Authoritative yet accessible, The Institutions of the European Union is the best guide to how institutions work together to provide political direction, manage the European Union, govern policies, and integrate contrasting interests within the EU.
Clive Church and David Phinnemore
This chapter explores how the EU ended a long period of constitutional change by agreeing the Treaty of Lisbon and used it to face new challenges of financial crisis, Brexit, and Covid-19—the latter events leading to thoughts that further treaty change might be needed. The process started with the 2002–03 Convention on the Future of Europe leadin to the Constitutional Treaty of 2004 and in October 2007 produced the Treaty of Lisbon which eventually entered into force on 1 December 2009. Its implementation was complicated by the eurozone crisis, resulting in extra-treaty arrangements and another treaty amendment. Although the official appetite for treaty reform all but evaporated in the 2010s, the UK’s June 2016 vote to quit the EU raised the hopes for further changes. The end of the 2010s and into the 2020s saw Brexit being negotiated within the terms of the Treaty of European Union the EU’s treaty agreeing measures to deal with the Covid-19 pandemic. Calls for treaty revision continued but active steps to re-negotiate the consolidated treaties have not yet begun.
11. The institutions of Economic and Monetary Union:
from the euro crisis to COVID-19
Since 1999, a subset of EU member states—known collectively as the euro area—has delegated exclusive competence for monetary policy to the European Central Bank (ECB), while giving limited powers to the European Commission, ECOFIN, and the Eurogroup in other areas of economic policy. The euro crisis provided the first major test of the Economic and Monetary Union (EMU), as a sovereign debt crisis spread between member states and threatened to tear the single currency apart. The ECB and two new institutions—the European Stability Mechanism and Euro Summit—helped to keep the euro area together but at significant economic and political cost. EU institutions were better prepared for the initial economic consequences of the COVID-19 pandemic, but the crisis still produced important institutional changes. The COVID-19 recovery fund Next Generation EU gives the Commission and Council a major new role in economic policy, albeit a temporary one for now. The EMU illustrates three key dimensions of EU institutional politics: the tension between intergovernmental versus supranational institutions, leaders versus followers, and legitimacy versus contestation. It also reveals the explanatory power of new institutionalism among other theoretical perspectives.