EU economic governance, Sixpack describes a series of European legislative acts to reform the Stability and Growth Pact and introduce greater macroeconomic oversight. These measures are bundled into "six packages" of rules, filed in September 2010 as two versions each by the European Commission and the Council of Europe taskforce. In March 2011 the ECOFIN board reached preliminary approval for Sixpack's contents with the Commission, and negotiations for approval by the European Parliament then began. In the end it came into effect December 13, 2011, after a year of previous negotiations. These six rules aim to strengthen procedures for reducing public deficits and addressing macroeconomic imbalances.
Video Sixpack (European Union law)
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All 28 EU member states are committed by the paragraphs in the EU Treaty, referred to as the Stability and Growth Pact (SGP), to implement fiscal policies aimed at keeping the country within the government's deficit limit (3% of GDP) and debt (60% GDP); and in case of having a debt rate above 60% then each year should have a downward trend. Every year all EU member states are required to submit SGP compliance reports for the monitoring and evaluation of the European Commission and the Council of Ministers, which will present the expected fiscal developments of the country for the three years now and thereafter. These reports are called "stability programs" for the Member States of the European Zone and "convergence programs" for non-eurozone Member States, but despite having different titles they are identical in their content. Following the SGP reform in 2005, these programs also incorporate the Medium-Term Budget Goals (MTOs), calculated individually for each Member State as the medium-term sustainable medium-term rate for the country's structural deficit, the Member State is also obliged to outline the steps - steps you want to apply to achieve its MTO. If EU Member States do not comply with the limit of deficits and debt limits, the so-called "Excessive Deficit Procedure" (EDP) begins in conjunction with a deadline for compliance, outlining "the path of adjustment to achieve the MTO".
Four of the six instruments at Sixpack are used to carry out further reforms of the "Stability and Growth Pact" (SGP), which focus on improving compliance. This reform does not alter any conditions established by the SGP, but aims to enforce greater budget discipline among the euro-area Member States by establishing that sanctions begin to apply earlier and more consistently. For example, when a country that opposes an excessive deficit procedure is opened fails to take the necessary steps to eliminate its deficit, a flowering deposit that equals 0.2% of GDP maturity. With continued non-compliance, the deposit is converted to a fine. In addition, automatic sanctions are triggered under different voting mechanisms in the Council of the European Union. At the same time national account statistics and Predicted Member State practices are adjusted to comply with EU standards. If it is determined that a country has reported false data, additional fines may be imposed.
The remaining two parts of legislation in Sixpack relate to Macroeconomic Imbalance Procedures, early warning systems and corrective mechanisms for excessive macroeconomic imbalances.
Maps Sixpack (European Union law)
EU specific rules and guidelines
Specifically, EU Sixpack deals with the following rules and guidelines:
- Fiscal Policy
- 1. Rule 1175/2011 changes Regulation 1466/97: On the strengthening of oversight of budgetary position and supervision and coordination of economic policy.
- 2. Rule 1177/2011 changes Regulation 1467/97: When accelerating and clarifying excessive deficit execution procedures.
- 3. Regulation 1173/2011: On enforcing effective budget oversight in the euro area.
- 4. Directive 2011/85/EU: On terms for the budget framework of Member States.
Referrals must be implemented by all EU member states by December 31, 2013.
- Macroeconomic imbalances
- 5. Rule 1176/2011: About prevention and correction of macroeconomic imbalances.
It outlines the details of procedures for monitoring macroeconomic imbalances and includes all EU member states.
- 6. Regulation 1174/2011: On enforcement measures to correct excessive macroeconomic imbalances in the euro area.
This Regulation applies only to all Member States of the European Zone, and focuses on the possibility of other sanctions and procedures for upholding the "corrective action plan" required to comply with the EIP recommendations of the Council.
Further suggestions for Eurozone
Development of the euro zone fiscal union can be described as the fourth stage of the EMU, which is proposed to be implemented for the Euro Zone in the near future. The argument presented is that Member States sharing the same currency will also need more fiscal policy integration (closer collaboration on fiscal issues) and tight budgetary oversight, to prevent and combat the occurrence of financial instability caused by macroeconomic imbalances in a monetary union.
Two packages
The step towards increasing the fiscal discipline of EU Member States was taken on November 23, 2011, when the European Commission proposed two Rules (also known as "Two Packages"), which introduced additional coordination and oversight of the budget process for all members of the eurozone. Additional rules complement the SGP requirements for oversight, by increasing the frequency of Member State policy checks, but not putting additional requirements on the policy itself. The frequency of monitoring will depend on the economic health of the member country. As regulation begins, all eurozone member nations are obliged to respect "Rule 1", while "Rule 2" - demands more in-depth and frequent monitoring - will only be triggered if the state receives macroeconomic financial assistance or has an ongoing Excessive Abalone Procedure (EIP ):
- 1. Rule 473/2013: In general terms to monitor and assess the draft budget plan and ensure the correction of deficit in excess of Member States in the euro area.
If a member country of the eurozone is not involved in an Excessive Deficit Procedure (EDP) or an Excessive Imbalance Procedure (EIP) or a financial aid program, the only additional monitoring requirement (as compared with SGP) is for Member States to submit fiscal draft budgets for the coming year to European Commission: no later than 15 October; and will then wait to accept the opinion of the Commission before being debated and elected in the national parliament. The European Commission will not be granted any veto on the potential of the national parliament through the fiscal budget but will have a role to issue advance warning to the national parliament if the proposed budget draft is found to compromise the debt and deficit rules outlined by the European Fiscal Compact. The reporting requirement on the member countries of the Zone of Europe subject to the open EDP is governed by articles 6 to 12, which specifies that the "status report for corrective action" will be published no later than 6 months after the Council has granted the country an official deadline for EDP ​​correction, and with the frequency increased to quarterly reports for those "Member States insist on not practicing the Council's recommendation" for corrective action to improve the situation of excessive deficit - leading to the notice of the Council to immediately implement deficit reduction measures in accordance with Article 126 (9) of the TFEU. Articles 6 to 12 do not apply to Member States with open EDPs that are also subject to macroeconomic adjustment programs - because their improvement of reporting requirements is specifically outlined by regulation 472/2013.
- 2. Regulation 472/2013: On strengthening the oversight of the economy and the budgets of Member States in the euro area are experiencing or threatened with serious difficulties with regard to their financial stability.
A member of the European Zone with ongoing EIP, or engaging in EFSM/EFSF/ESM/IMF/other bilateral financial aid programs, will be required to further increase the level and frequency of monitoring/oversight reports submitted to the European Commission. The so-called "increased oversight" will mean that the "status report for corrective action" needs to be published every three months, and that the Commission on that basis will be permitted to send a warning to the national parliament of the member country concerned. , about the possibility of failing to meet program targets and/or fiscal adjustment channels to comply with EDP deadlines, early in the process, that affected member states still have sufficient time to implement the necessary counter measures to prevent possible compliance delays required. Rule 472/2013 will continue to apply to member states recently after ending the macroeconomic financial assistance program, with active post-program supervision until at least the time when more than 25% of the loan money has been repaid. In the case of "ongoing risks to financial stability or fiscal sustainability of the Member State concerned", the Council may also decide to extend the duration of post-program supervision. Finally it should be noted that Regulation 472/2013 shall not apply to member states without an open EIP receiving macroeconomic financial assistance only in the form of an undirected "Pregnancy Line".
These two rules apply to all euro zone member states, and together form stronger budget governance with a more stringent monitoring and oversight system by the European Commission. According to article 136 in the Agreement on the Functioning of the European Union, the enactment and enforcement of legislation requires the adoption of the Council in accordance with the European Parliament, subject to the eligible majority of the 17 member countries of the eurozone. The ECOFIN Council reached a final agreement with the Parliament's Permanent Representative Committee on February 20, 2013. Parliament subsequently adopted two packages on 12 March, with the first legislation passed by 526 votes to 86 against and 66 abstentions, and with the second the regulation passed 528 votes for towards 81 against and 71 abstentions. Subsequently the two packages were finally adopted by the Council of the European Union on May 13, with the publication of legal action in the Official Journal of the European Union on 27 May, and the enactment of the law officially entered into force on May 30, 2013. Most of the provisions will take effect from the date of entry into force. In relation to the increased frequency of reporting for Member States with open EDP, and the requirement to establish independent bodies that monitor compliance with fiscal rules, the provisions of this article shall only take effect from 31 October 2013.
The provisions of the Two-pack (which applies only to the member states of the European Zone), complement and extend the Six-pack Reformed Stability and Growth Pact, as well as integrate some elements of the ratified, inter-government, European Fiscal Compact to EU Law. Examples of identical elements with Compact Fiscal: 1) Member States are required to amend the SGP fiscal rules into national legislation, 2) Member States in EDP are required to prepare "economic partnership programs"; 3) Member States are required to submit their debt issuance plan for ex-ante coordination with other Member States . The new legal structure introduced by Two packages, is March 2013 which is expected to be used for the first time, when the 2014 fiscal draft budget bill will be submitted to the European Commission for review and previous comments on October 15, 2013.
Eurobonds
On 23 November 2011, the European Commission also presented a Green paper for possible introduction of Eurobonds (referred to as "Stability Bonds"), which outlines the options and levels for public issuance and general guarantees. After concluding a public consultation on this issue in January 2012, the Commission requested a political opinion of the European Economic and Social Committee . This opinion was submitted to the Commission on 11 July 2012, with recommendations to the Commission to continue its political work to develop the proposal. The committee reveals that it is preferable option in which eurobonds should carry a full general payment guarantee (of all eurozone member countries), but only replace some of the current national bonds (depending on the criteria of fiscal responsibility still to be developed). It is fully agreed that the impact of introducing eurobond will be an effective tool for ensuring low (and more equal) interest rates in all euro zone countries (with the rate of influence associated with how much of the national bonds will be replaced by eurobonds). But the committee also called for additional impact research, to map out whether (or how much) 3 different levels of introduction to eurobonds could potentially also introduce some negative consequences, in the form of an increased risk that each euro zone country might exploit "the security generated by eurobonds general ", just to lower their" fiscal responsibility "degree at the national level.
The introduction of Eurobonds (First Stability Bonds) is expected first to require changes to the Agreement and/or other first political deal to be implemented. Although there is a relatively long roadmap for the possibility of introduction of eurobond, it is believed that an agreement for this proposal could have a direct impact on market expectations, resulting in an immediate decline in funding costs through lower government bond yields, for Member States currently facing funding pressures.
The European Commission presented on November 28, 2012 a "Blueprint", about how it sees the path in the short to medium long term to build a deep and original EMU . In this report, the introduction of eurobonds is described as the last last step on the path to creating a pure fiscal union, and something newly introduced in the long run (beyond 5 years from 2012). This report suggests for the medium term (18 months to 5 years), that it is more appropriate as a first step, to introduce the publication by the Eurozone Member States of the so-called eurobills , defined as short-term instruments to finance government debt with a maturity of up to one or two years. This first step of the eurobills still requires a change of agreement in line with increased calls for the implementation of tighter fiscal policy integration (creating earlier "strong budget governance and watertight surveillance and surveillance systems" in the Euro Zone, beyond what has already been done by Six -pack and Two-pack). However, the introduction of eurobills does not require full integration of fiscal policy from the start, since that fact will only include the introduction of common short-term debt, which represents only a fraction of the total government debt, and thus the risk of "moral hazard" executed in member countries will also be limited (since most government debt, financed by medium and long-term bonds, will still be generated according to the credit rating of each country in the financial markets).
The "blueprint" of the next steps towards a deeper Economic and Monetary Union should be regarded as the first draft version of the joint report of the "Four Presidents" (signed by the President of the European Council, the President of the European Commission, the President of the European Central Bank and the President of the Eurogroup ), which will be discussed further by the Council of Europe on 13-14 December 2012.
Convergence and Competitiveness Tool (CCI)
The European Commission has also recently proposed the establishment of a Convergence and Competitiveness (CCI) Instrument within the EU budget. This proposal is to create a special EU budget account with special funds, to support the implementation of necessary structural reforms (traditionally considered politically unpopular to be implemented), where implementation funds will be paid by CCI funds depending on strict adherence to " contracts "for agreed structural reforms, with both contracting parties being Member States and Commissions. If Member States implement the structural reforms identified and required to ensure convergence/competitiveness, then the CCI budget will speak out to pay Member States in return for economically behaving in a healthy and responsible manner. This proposal is expected to be further debated, as soon as the Council has concluded an agreement for the next 7 years EU budget (also referred to as the "Multi-annual Financial Framework 2014-2020").
An additional/related suggestion that is also currently being debated is to make CCI outside of the EU budget and only allow it to apply to euro zone member countries, on a budget, not to be covered by income from collection of Taxes on Financial Transactions (FTT). In October 2012, the FTT was officially approved for implementation and came into force on 1 January 2014 in 11 of the 17 euro zone member states. At present no official decision is reached, if the collected revenue should be kept as a direct national income, or it may be transferred to a supranational euro zone budget.
Union Banking
Proposals for creating the Banking Union, encompassing both the creation of a Single Supervisory Mechanism (SSM), and after adoption also the Single Resolution Mechanism (SRM) to handle the bank in trouble. This new independent organization should be responsible for the restructuring and settlement of banks in EU Member States participating in the Banking Union (which means that it is not limited to the eurozone). The European Commission presented the proposal of 12 September 2012 and at the EU Summit in October, it was agreed to formally request that the final proposal for the SSM framework be agreed between the Council and Parliament before the end of the year, with a view to SSM to be established in 2013 and fully established to cover all banks starting from 1 January 2014.
On 29 November 2012, the European Parliament's Economic and Monetary Affairs Committee voted and approved the initial framework proposal and final approval of the final proposal agreed between the Council and Parliament is now the next step. The remaining issue for the ECOFIN board to be considered at the next meeting on December 4, 2012, is to decide: "the role of national supervisor, ECB governance and voting rights in the EBA". At the council meeting there is not enough time to approve the final decision, so the board will be called for a second meeting in 8 days, with the aim of ending work ahead of the EU summit on 13-14 December. Any amendment to EU law concerning the EBA requires (pursuant to section 114 of the TFEU): The majority eligible in the Council in connection with the approval of Parliament. While any changes to the EU law on the function/role of the ECB require (under section 127 (6) of TFEU): "Unanimity to be adopted by the Council, in consultation with the European Parliament and the ECB".
See also
- Enhanced cooperation
- Europe's sovereign debt crisis
- European Fiscal Union
- Euro Plus Pact
- Macroeconomic Imbalance Procedures
References
External links
- Press release on Six-pack: EU's "Six-Pack" Economic Governance comes into force, Europa, December 12, 2011
- Overview of all EU instruments for governance Economics: Economic governance in the EU, European Commission, October 26, 2012
Source of the article : Wikipedia
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