Economic and Monetary Union - Economic Governance

These flashcards cover key concepts related to the Economic and Monetary Union and its governance, including definitions, historical events, criteria for membership, and the challenges faced by the EMU.

What were the main economic reasons for introducing the Economic and Monetary Union (EMU)?

To optimize the single market, avoid competitive devaluations, reduce exchange rate risks, minimize transaction costs, and increase price transparency.

What are 'Maastricht criteria'?

Criteria that member states need to comply with for EMU membership, including price stability, budgetary discipline, exchange rate stability, and interest rate stability.

What was the main aim of the Delors Report (1989) regarding the EMU?

To implement conditions necessary for a European Economic Union, such as single market and macroeconomic coordination.

Which countries were noted as not participating in EMU Stage 3 at its initiation in 1999?

Greece, UK, Denmark, and Sweden.

What were the consequences of the ERM crisis of 1992/93?

Speculative pressure on national currencies led to devaluations and withdrawal from the ERM, increasing skepticism about EMU.

What is the purpose of the Stability and Growth Pact (1996)?

To enforce budgetary discipline ensuring member states maintain a budget deficit below 3% of GDP.

What conditions led to the introduction of quantitative easing by the ECB in 2015?

The need to stimulate the economy and address the slow recovery from the banking and sovereign debt crises.

What key transformation occurred during the Covid-19 crisis in relation to the Stability and Growth Pact?

Activation of the 'special escape clause' allowing for flexible debt to support national economies.

What was the result of the economic divergence among eurozone members during the sovereign debt crisis?

Increased calls for economic and fiscal integration to better cope with economic shocks.

Which countries are included in the Economic and Monetary Union (EMU) that adopted the euro?

As of 2025, 20 member states have adopted the euro, including Greece, Slovenia, Cyprus, Malta, Slovakia, and others.

What challenges does EMU face regarding economic governance?

The need for stronger coordination of economic and fiscal policies among member states to ensure stability.

What significant measure was introduced to manage excessive debts in member states?

The European Stability Mechanism (2012) was established to provide financial support under strict conditions.

What were the two responses to the financial crisis as part of economic governance reforms?

Implementation of the 'six pack' and the 'Two-pack', which increased surveillance and budgetary monitoring of Eurozone states.

What key issue was highlighted during the discussions about EMU membership criteria?

The tension between maintaining national sovereignty and the pooled monetary sovereignty required for EMU.

What was the political aim behind the establishment of the EMU according to the lecture?

To foster deeper integration within the EU and ensure the full incorporation of Germany into the European project.