Challenges of the Knowledge Society (Apr 2011)
„STABILITY AND GROWTH PACT, COMMUNITY DOCUMENT „REVIVED” IN THE CURRENT GLOBAL ECONOMIC CRISIS”
Abstract
The article proposes to make a reasoned radiography Stability and Growth Pact, EU document revived therefore need to strengthen financial discipline and budget 6 to 7 September 2010 meeting of the Economic and Financial Affairs Council (ECOFIN). He talked about the introduction of the Stability and Growth in a 'European quarter' which will be monitored in structural and fiscal policies of the Member States. He also held a first exchange of views about the possible introduction of a levy on banks and a tax on financial transactions. Thus, the European Union has moved to create the world's first supranational system of control over the financial markets, particularly in order to reduce the risk of global financial crisis. The system will act in early 2011. For the first time in history, European financial control agencies will have more seats than national governments. In addition, the European Central Bank will see a branch that will track the emergence of crisis risk.The financial crisis has diminished the EU's growth potential, and made it clear just how interdependent its members' economies are, particularly inside the eurozone. The most important priority now is to restore growth and create effective mechanisms for regulating financial markets - in Europe and internationally. In strengthening its system of economic governance, Europe must learn from previous shortcomings which have put the financial stability of the whole eurozone at risk:- poor observance of the EU's sound rules and procedures for economic policy coordination- insufficient reduction in public debt during the good times – with peer pressure proving an adequate incentive- failure to deal effectively with the build-up of macroeconomic imbalances - despite the Commission's warnings – resulting in high current account deficits, large external indebtedness and high public debt levels in a number of countries (above the official 60% limit for eurozone countries). Greater economic policy coordination in the EU will be achieved by tools designed to:- strengthen the preventive and corrective arms of the Stability & Growth Pact- address imbalances through stronger macroeconomic surveillance, including alert and sanction mechanisms- set out effective enforcement mechanisms to ensure that member countries will act in compliance with the EU framework they have agreed.
