engleski

Euro Enlargement Between Convergence And (De)Financialization

In conclusion, we share the view that the accession criteria need to be enriched by a set of additional factors. One lesson learned from the crisis is that the set of criteria for determining whether a country qualifies for joining the euro area has to be extended. These include, for example, balance-of-payment developments (dynamics and level of the current–account deficit), unit labour costs developments and other price indices (asset-price inflation, deflation/lowflation indicators) and other monetary indicators (private banks’ credit growth, private debt, ‘shadow banking’ operations, and all other macroprudential indicators. This is to prevent systemic financial risks, such as FX exposure based on informal euroization/dollarization, i.e. any ‘currency substitution’ process has to be closely monitored under the MIP as a potential source of systemic financial crises, etc). Thus, the ERM II arrangement should be transformed into a more effective transitional monetary arrangement, embracing a selective approach for the non–euro area. And, this is the real challenge for EU reforms in 2018: “the eurozone debt crisis showed that the key weakness of the euro area was financial instability". A near-term agenda to strengthen EMU “should rest on a balance of further risk-sharing and enhanced market discipline”. At the heart of this next stage of monetary integration are banking union (in particular, a supranational deposit insurance scheme) and capital markets union. European economic governance also needs to be deeply reformed with the aim of strengthening financial stability and monetary union.

euro enlargement ; convergence ; divergence ; (de)financialization

nije evidentirano