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Fiscal and Monetary Policy in European Market

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Fiscal and Monetary policy of European Union
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: * Coordination of economic policy-making between Member States * Coordination of fiscal policies, notably through limits on government debt and deficit * An independent monetary policy run by the European Central Bank (ECB) * The single currency and the euro area
The launch of the euro saw the creation of a two-tier Europe, but systemic defects led subsequently to the current crisis of the Eurozone, resulting in a much more complex and problematic set of core-periphery relations between north and south. The preeminent role of Germany in the north is pointing to the lack of democratic legitimacy in the whole construction. The idea of creating a banking union and fiscal union is in principle aimed at restoring unity to the Eurozone and ensuring its effectiveness. While negotiations over the banking union are ongoing, the recent fiscal innovations are not even approaching the constitution of a sustainable fiscal union. A more federalistic fiscal structure is needed, but this demands major political leadership.
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