This is the (updated) translation of an article that was published March 24, 2015 on flassbeck-economics. We are publishing one article in English every week to allow more readers to follow closely our analysis of global and European events. However, translation is not free and we have to ask for a contribution from our English speaking readers also.

This is the third part of my discussion of the paper “Preparing for Next Steps on Better Economic Governance in the Euro Area”, which was used at an informal gathering of the European Council in Brussels a couple of weeks ago. The first and the second part are here.

In the third section of the ‘Analytical Note,’ the authors list five reforms of the regulatory framework that have been implemented in order to combat the economic crisis in Europe. The authors add that, in their view, if these regulatory mechanisms had existed ten years earlier, the development of the EMU, both before and after the financial crisis, would have led to significantly better results. Is this an admission that they did not do their work in a proper way? They refer to the European Stability Mechanism (ESM), the Banking Union under the supervision of the ECB, the Macroeconomic Imbalance Procedure (MIP), the Fiscal Compact and the further development of the European statistics agency Eurostat. In my opinion, only the MIP is relevant to this discussion because it is this procedure that stood and continues to stand in the way of solving the euro crisis. However, the MIP is not criticised in the EU text. It only mentions that the further development of the MIP would lead to more powerful early stage detections of macroeconomic weaknesses (”vulnerabilities”), so that the best instruments can be selected in order to correct them.

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