The reform of the economic governance of the Eurozone: macroeconomic supervision and coordination

The economic policy framework of the Euro area displays significant limitations. While these deficiencies are a result of the design of the Euro project, they have become increasingly evident during the current economic crisis. The European Commission and the Council have put forward a set of reforms aimed at improving the economic governance of the Euro area. This proposal seeks to enhance the surveillance and discipline of fiscal policies, as well as to introduce a new mechanism for the prevention and correction of macroeconomic imbalances. In our opinion, while the reform shows some positive aspects, such as the monitoring of the current account deficits, it does not deal in depth with the necessary redesign of the economic governance of the Eurozone. Specifically, the tightening of fiscal rules is not adequate, the reform does not constitute a step forward in terms of fiscal coordination, the countries with current account deficit bear almost exclusively the burden of the adjustment and there is no re-definition of the role that the ECB should play in a debt crisis such as the current one.