Economic and Monetary Union (EMU)

EMU involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency — the euro. Whilst all 27 European Union (EU) countries take part in the economic union, some countries have taken integration further and adopted the euro. Together, these countries make up the euro area.

Economic integration brings the benefits of greater size, internal efficiency and robustness to the EU economy as a whole and to the economies of individual EU countries. 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 policymaking between EU countries;
• coordination of fiscal policies, particularly limits on government debt and deficit;
• an independent monetary policy run by the European Central Bank (ECB) in the euro area;
• single rules and supervision of financial institutions within the euro area;
• the single currency and the euro area.

Since the 2008 financial and economic crisis, the EU has greatly strengthened its economic governance systems to better detect, prevent, and correct potential economic problems such as excessive government deficits, public debt levels or macroeconomic imbalances, and to make sure that Europe is better prepared for future economic shocks.

SEE ALSO

• Broad economic policy guidelines (BEPG)
• Convergence criteria
• Economic policy
• European Central Bank
• European semester
• European Union
• Monetary policy
• Stability and Growth Pact
• EU economic and monetary union (summary)
• Economic and Monetary Union (European Commission)
• Economic and Monetary Union (European Central Bank).