Vítor Constâncio, Vice-President of the ECB, spoke on the future implications of the Banking Union, saying that the sovereignty-sharing that monetary union represented implies further progress towards more political union.
Banking Union is an essential complement to monetary union and a project with vast consequences for European integration. It is not, however, the end of the journey. Banking Union must provide a stable and efficient framework for the major endeavour of completing the economic and monetary union. The dynamics of Jean Monnet's functional method of integration is still fully operational. From each institutional innovation, others become necessary and more pressing. For instance, to fully reap the benefits of Banking Union, there is need legislative changes that the Commission should promote, in order to complete the programme of financial services integration, particularly in relation to the capital markets. That would include changes to company law, bankruptcy rules and procedures, and higher harmonisation in the taxation of financial products.
Other institutional developments are also well identified in the President Van Rompuy's Report "Towards a genuine Economic and Monetary Union".
First, a more complete fiscal union going beyond mere disciplinary rules seems necessary, along the lines described in that Report when it asks for "-.the establishment of a fiscal capacity to facilitate adjustment to economic shocks. This could take the form of an insurance-type mechanism between euro area countries to buffer large country-specific economic shocks. Such a function would ensure a form of fiscal solidarity exercised over economic cycles, improving the resilience of the euro area as a whole and reducing the financial and output costs associated with macroeconomic adjustments".
Second, under the umbrella of Economic Union, there is need further progress in the completion of the single market of services and a more co-ordinated approach to macroeconomic policy at the Eurozone level.
The sovereignty-sharing that monetary union represented implies further progress towards more political union. The euro area is, in the end, a political project and what we now need is to complete the integration of European nations in this unique community that is neither a nation nor a State. It is a powerful vision of preserving and defending national identities and interests in a globalised and very challenging world.
© BIS - Bank for International Settlements
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