Economic and monetary integration can be traced back to the very beginnings of the European Communities, as shown by the provisions of the 1957 Treaty establishing the European Economic Community.

The Member States had to co-ordinate their economic policies closely with the institutions of the Community (Article 6) to the extent necessary to obtain the objectives of the treaty (Articles 2 and 3).

Some of the main objectives, such as the creation of a common market and the increasing convergence of the economic policies of the Member States (Article 2), made it necessary to foresee (Article 3) the abolition of the obstacles which existed to the free movement of goods, persons, services, and capital between the Member States.

Because of the restrictions on capital movements and foreign exchange regulations at that time, the liberalisation of capital movements and the co-ordination of foreign exchange policies was an important part of the original Treaty establishing the European Economic Community (EEC, Articles 67-73).

The Commission was given an important role in this process of liberalisation (Articles 71, 72), in particular in supervising potential safeguard measures taken by Member States in relation to the functioning of their capital markets (Article 73).

The Treaty’s Economic Policy chapter (Articles 103-116) consisted of three items, “conjunctural policy” (Article 103), “balance-of-payments” (Articles 104-109) and “commercial policy” (Articles 110-116).

The scope of common action was different; conjunctural (or short-term) economic policies were considered as “a matter of common concern” (Article 103), while each Member State recognised by signing the treaty that each of them was ready to treat its policy in the field of exchange rates as “a matter of common concern” (Article 107), and to accept a common commercial policy (Article 110).

Although responsibility for economic and monetary policies remained with the Member States, measures appropriate to the economic situation could be taken at European level on a proposal from the European Commission by a unanimous vote of the Council of Ministers; any decision linked to the application of a measure once decided could be taken by a qualified majority vote.
In order to facilitate the objectives of high employment, price stability, balanced external exchanges and confidence in the currency (Article 104), Member States agreed to co-ordinate their economic and monetary policies and to ensure co-operation among themselves, especially between the relevant ministries and their central banks (Article 105). In particular, in order to promote the co-ordination of the monetary policies of Member States for the smooth functioning of the common market, a Monetary Committee was set up, consisting of representatives of the appropriate national ministries, the central banks and the Commission.

Furthermore, it was agreed that payments between Member States should be liberalised and transfers of capital and labour income be authorised (Article 106).

In the event of a Member State encountering balance-of-payment difficulties (Article 108), the Commission was required to immediately investigate the position of the State in question and the action which it had taken, and then to recommend measures itself. If these measures did not prove effective in solving the problem, the Commission would, after consulting the Monetary Committee, then propose to the Council a mutual assistance mechanism and the appropriate methods. The Council would decide by qualified majority on the mutual assistance mechanism and on what directives or regulations should be adopted.

In the event of a sudden crisis in which a Member State had introduced a protective measure for its balance of payments, the Commission would recommend the mechanism of mutual assistance or the Council could, on an opinion from the Commission and after having consulted the Monetary Committee, amend or suspend the protective measure (Article 109).

Finally, in international organisations of an economic character Member States agreed to speak with one voice in all matters of particular interest to the common market (Article 116). To that end, the Commission would propose the scope and implementation for common action to the members of the Council, which would ultimately take the decision by a qualified majority.

As to the common commercial policy, the Commission negotiates on behalf of the Community with the support of a Council Committee (113 Committee) and according to directives that the Council can address to the Commission. In executing its powers under this article the Council decides by qualified majority (Article 113).
 

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