Economic and Monetary Union (EMU) represents a major step in the integration of EU economies. It involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro. Whilst all 27 EU Member States take part in the economic union, some countries have taken integration further and adopted the euro. Together, these countries make up the euro area.
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 later enshrined in the Treaty on European Union (the Maastricht Treaty). Economic and Monetary Union takes the EU one step further in its process of economic integration, which started in 1957 when it was founded. Economic integration brings the benefits of greater size, internal efficiency and robustness to the EU economy as a whole and to the economies of the individual Member States. This, in turn, offers opportunities for economic stability, higher growth and more employment – outcomes of direct benefit to EU citizens. In practical terms, EMU means:
Economic governance under EMU
Within EMU there is no single institution responsible for economic policy. Instead, the responsibility is divided between Member States and the EU institutions. The main actors in EMU are:
Generally, economic and monetary union is an advanced step in the process of economic integration. The degrees of economic integration can be divided into six steps:
When the European Union was founded in 1958 as the European Economic Community, the aim was to build a customs union and a common market for agriculture. Subsequently, this limited common market was extended to cover also goods and services in the single market, which was largely completed by 1993. Today, the European Union is on the fifth step of this model. Progressive economic integration did not start with the decision to create the euro: it is a long process, part of the history of the EU, and one of its major achievements.