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Making the most of the EMU: Challenges and opportunities for structural reforms

Author(s): Luiz de Mello

Date published: Sep 2019

SUERF Policy Note, Issue No 98
by Luiz de Mello, OECD

 

JEL-codes: O52, O47, E60.
Keywords: Euro area, convergence, resilience.


Much progress has been made over the last two decades to consolidate the monetary union. Further reforms are nevertheless needed on two main fronts. First, policy action is needed to ensure a faster convergence in living standards within the euro area through structural reforms to enhance productivity and labour resource utilisation, which are the key drivers of growth in GDP per capita. Second, reforms are also needed to strengthen the architecture of the monetary union in a manner that can enhance its resilience to downturns and ensure its long-term sustainability. These reforms include progress with the banking union, balancing risk reduction and risk sharing; the establishment of a fiscal stabilisation tool for the euro area to absorb country-specific and common euro area shocks, complementing member states’ fiscal policies; and the creation of a genuine capital markets union. This note highlights the key issues and directions for policy reform in these two main areas.

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SUERF Policy Note, Issue No 98SUERF Policy Note, Issue No 98

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