Beyond the economics of the euro - analysing the institutional evolution of EMU 1999-2010, September 2011

This paper examines how and why the institutional framework governing EMU has evolved since the creation of the euro. Building on theories of institutionalism, the paper in particular investigates to what extent functional spillovers from the single currency into other policy domains, like macroecon...

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Bibliographic Details
Published in:Policy File 2011
Main Authors: Salines, Marion, Glocker, Gabriel, Truchlewski, Zbigniew, Favero, Paola del
Format: Report
Language:English
Subjects:
Banking/Finance
Economic policy
European Central Bank
Online Access:Request full text
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Summary:This paper examines how and why the institutional framework governing EMU has evolved since the creation of the euro. Building on theories of institutionalism, the paper in particular investigates to what extent functional spillovers from the single currency into other policy domains, like macroeconomic policies or financial regulation, met with an adequate institutional response, and to what extent the existing institutional framework conditioned the response to the fi nancial crisis. The interaction between policy requirements and institutional capabilities is examined both in "ordinary times" (1999-2007) and under "crisis conditions" (2007-10). The paper uses a typology of change which helps to put into perspective both the resilience of the institutional framework of EMU and its capacity to adapt. In this respect, it allows for a better understanding and framing of the current reforms of EMU economic governance. It concludes that even though the crisis will accelerate institutional development, it will do so only gradually, as path dependence and an inbuilt bias towards incremental change will prevent policy-makers from pursuing a "clean slate" strategy.