A new governance for the EMU and the economic policy framework

The severe crisis that affected the European Monetary Union has emphasized the prevailing interests of national governments and a lack of political leadership of the European institution , while the governance of the euro area has been incapable of an effective crisis management. The present work argues that the decisions taken in March 2011 by the European Council, named the ‘Pact for the Euro’, to design a new governance of the EMU, can be considered a fairly significant step for the European institutions in terms of credibility and legitimacy. This contribution, evaluating the economic policy framework set by the Pact for the Euro, underlines the need for appropriate institutions and a stronger attitude to cooperate among the Member States. It also stresses the need for transparency and a non ambiguous solution of the debt crisis. The major message of this work is that Economic and Monetary Union must equip itself with appropriate policy tools to manage and resolve the crisis, creating the condition to improve the competitiveness of the peripheral countries of the euro area and fostering growth. But, at the same time, Member States of the euro area and European institutions must demonstrate greater accountability and political coherence.