From Governance to Government? Steps towards a genuine monetary union

The Euro Area is navigating uncharted waters: it started, in slow motion, to
slide towards a fiscal federation, while still lacking both the fiscal capacity and the democratic qualification to achieve this goal. Strengthening the EMU democratic profile is a fundamental requirement for the sustainability of the EMU as much as its completion with a fiscal and economic arm. Yet, according to the Five Presidents Report released in 2015, no substantial progress is expected to be achieved before 2025. Against this background, this paper is structured in two parts. The first part discusses the rationale for the creation of a fiscal capacity and for coordination of economic policy The second part proposes a new mechanism – a Joint Budgetary Procedure – to strengthen the Eurozone governance in a Treaty-neutral way, paving the way for smoother implementation after the 2025 assumed Treaty change.