CEPS Forum: Reconstructing the Union EMU governance: a reality check Address by Dr Mario Vella Governor of the Central Bank of Malta Brussels, 23 February 2017  The Five Presidents’ Report on Completing Europe’s Economic and Monetary Union argues that economic and political convergence underpinning EMU needs to go deeper if it is to ensure prosperity for all its members and fairer outcome for its citizens. In the first phase, which was meant to be completed in June, the report envisages a number of steps including: −  a new boost to convergence, employment and growth, through the creation of a euro area system of competitiveness authorities and stronger implementation of the Macroeconomic Imbalance Procedure;  −  the completion of the banking union and the launch of the capital markets union;  −  the establishment of a new advisory European Fiscal Board;  −  a reorganisation of the European Semester, with greater parliamentary control and accountability. The Commission should soon be publishing a related White Paper on the future of Europe. Before moving forward, let’s see what’s been achieved so far. In the twenty-five years since the Maastricht Treaty was signed, the euro has been established a successful currency. It is widely accepted as a medium of exchange and store of value, not only within the euro area itself, but also beyond it. It enjoys popular acceptance and support.
Another aspect of EMU governance is strengthening the economic part of EMU. This requires structural reforms aimed at enhancing potential growth, reducing structural unemployment and increasing national economies’ resistance to shocks. While many euro area countries undertook a wave of reforms during the crisis, today, across much of the area reforms have stalled. This is not a uniform picture. Malta is enjoying robust economic growth despite regional headwinds, largely as a result of reforms implemented in recent years that stimulated the development of new areas of economic activity and increased labour participation. Malta has also taken full advantage of its membership of the EU and its adoption of the single currency. Resilience to shocks can also be built up through deeper economic integration. Indeed, as the Five Presidents’ report argues, financial integration helps to share risk across EMU member countries. The completion of a Banking Union, which will strengthen the European banking sector, is a key objective in this regard. In this area, success so far has been partial. The Single Supervisory Mechanism involving the ECB via the Supervisory Board and the national supervisory authorities is up and running, following a comprehensive health check of the euro area banks. The Single Resolution Mechanism is also operational and is being funded according to plan. As regards the third pillar of Banking Union, the European Deposit Insurance Scheme (EDIS), negotiations are still under way. We believe that EDIS is will increase confidence in banks across the euro area.