currently the Head of the Research Division European Integration at the German
Institute for International and Security Affairs, Stiftung Wissenschaft und
Politik (SWP) in Berlin.
Since spring 2010, the European Union has progressed with reforms of its economic governance mechanisms at an
impressive speed. A first major achievement was the establishment of new European Financial Supervisory structures. On 16 December 2010, the legislation establishing the European Systemic Risk Board (ESRB) came into force. The ESRB is an independent EU body responsible for the macro-prudential oversight of the financial system within the EU. It contributes to the prevention or mitigation of systemic risks to financial stability in the EU and will also contribute to the smooth functioning of the internal market. On 1 January 2011, three new European authorities started their work for the supervision of financial activities with regard to banks, markets and insurances and pensions.
On 27 September 2010, the European Commission tabled a “Six Pack” of legislative acts with three objectives: to reform the Stability and Growth Pact which is designed to ensure sound public finances in the EU, to establish new standards for national fiscal frameworks to underpin the coordination of budgetary polices and to introduce rules and standards for the future surveillance and coordination of national economic policies. Just after the Commission proposals in October 2011, a task force composed of 27 Finance Ministers and headed by Council President Herman Van Rompuy released its report which, in addition to the issues tackled by the Commission’s proposals, identified the need for a European mechanism to deal with sovereign debt crises.
Expectations about further progress with the broad reform agenda were particularly high before this year’s Spring Summit of the European Council. And indeed, at its meeting of 24/25 March 2011, the European Council agreed on important parts of a so-called Comprehensive Package for the reform of European economic governance. Meanwhile, the legislative process dealing with the Commission’s Six Pack is running and likely to be concluded in 2011. Hence, the European Union has reacted to the financial, economic and sovereign debt crisis not only with ad-hoc measures, but is simultaneously implementing reforms which are considerably changing the governance structures of the eurozone.
However, the decisions will most probably not suffice to solve the most pressing issues ahead. This text looks at the three core elements of economic governance reform: the future set-up for budgetary policy coordination, the new approaches to economic policy coordination and the creation of the European Stability Mechanism to deal with sovereign debt crises. It argues that success is far from being guaranteed in either field. As a result the eurozone member governments may well have to review their reform agenda and may need to add items to make it a success.
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Daniela Schwarzer is currently the Head of the Research Division European Integration at the German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP) in Berlin. She joined the Institute in 2005. In 2010, she became a member of the team of academic advisors to the Polish Secretary of State for European Affairs in preparation of Poland’s EU Council Presidency in 2011. In 2007/2008 she was a member of the working group "Europe" of the Whitebook Commission on Foreign and European Policy in the French Foreign Ministry and a visiting researcher at the French Institute for International Relations 'ifri' in Paris. From 1999 until 2004 she served as editorialist and France correspondent for the Financial Times Deutschland. Prior to this, between 1996 and 1999, she was chargée de mission and later Head of the Information Department at the Association for the European Monetary Union in Paris.
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