The European Economic and Monetary Union
The Economic and Monetary Union (EMU) is multinational integration involving a common monetary policy and closely coordinated economic policies of the member states. EMU includes the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro. The policies integrate 28 Eurozone states, as well as non-euro European Union (EU) states. EMU has to be based on a common market in goods and services but is itself necessary for the proper functioning of the common market, as exchange rate variations between Member States' currencies hamper trade and investments. Euro has eliminated foreign exchange costs and exchange rate fluctuations and has strengthened trade within the EMU.
The decision to form an Economic and Monetary Union was taken by the European Council in the Dutch city of Maastricht in December 1991, and was thereafter protected in the Treaty on European Union (the Maastricht Treaty). Economic and Monetary Union took the EU one step ahead in its process of economic integration, which was started in 1957 when it was established. Economic amalgamation brought the benefits of greater size, internal efficiency and strength to the EU economy as a whole and also to the economies of the individual Member States. This gave opportunities for economic stability, higher growth and more employment – outcomes of direct benefit to EU citizens. The significant features of EMU are:
· Bring together economic policy-making between Member States
· Coordination of fiscal policies, notably through limits on government debt and deficit
· An independent monetary policy run by the European Central Bank (ECB)
· Single rules and supervision of financial Institutions within the euro area
· The single currency and the euro area
The European Central Bank (ECB) is the central monetary policy force in the European Economic and Monetary Union (EMU). The ECB’s chief responsibility is to safeguard price stability. Due to monetary policy, it aims to fix the inflation under two percent. After that, ECB's task is to support economic well-being in achieving a high rate of employment - as long as that does not risk price stability.
However, the EU is weakened by economic crisis and shaken by a sharp and awakening populism. Besides, the European region is always facing crises emerging from a looming Brexit, growing indifference towards its longstanding democratic credentials and institutions, divisions of monetary and financial resources, and, lastly, territorial dislocation.The EU leadership is pushing through serious political and economic instabilities. Despite all the existing hurdles, the members know that breaking up would be traumatic, both economically and politically. Further, such disintegration, would lead to the fall of the EU itself. It is also good that the Euro has forced some important reform measures across its members.
The latest focus is the European elections in May 2019. They are decisive for the direction the EU will follow: either a sovereign and strong EU or weak national states not being able to compete with the US or China. European businesses should engage in promoting a strong Europe, multilateralism and an open, liberal trade order. Therefore, companies should intensely defend these positions in public.