Is the Eurozone Stormproof? : On Deepening and Strengthening the EMU

On 6 October 2016, the Advisory Council on International Affairs (AIV) received a request from the Minister of Foreign Affairs for an advisory report on the further development of the eurozone, one of the key issues in the current process of European integration. The request referred to a report entitled Completing Europe's Economic and Monetary Union drawn up by the President of the European Commission in close cooperation with the President of the Euro Summit, the President of the Eurogroup, the President of the European Central Bank and the President of the European Parliament (the Five Presidents' Report). It sets out steps that need to be taken to improve economic governance of the eurozone and ultimately bring about financial and fiscal union. Although steps have already been taken to strengthen the eurozone, the government nevertheless understands the need to carefully weigh up the options available within the current treaty frameworks to strengthen economic and monetary union (EMU). The government stated that it would appreciate receiving an advisory report on this issue from the AIV, based on the following questions: 1. What steps can be taken within the limits of the current treaty framework to strengthen governance of the EMU in order to promote growth and the ability to absorb shocks in individual member states and the EMU as a whole? 2. What steps can be taken within the limits of the current treaty framework to promote real economic convergence within the eurozone? 3. Can the Advisory Council explain the implications of the individual steps in questions 1 and 2 for the Netherlands' economy and financial interests? 4. To what extent can the individual steps aimed at strengthening governance of the EMU and promoting real convergence influence political and economic cooperation at a wider EU level, with member states outside the eurozone - e.g. regarding decision-making on and the integrity of the internal market? The request for advice is attached as Annexe I. This advisory report has been prepared on the basis of these four questions.