The EU’s monetary and financial policies: The core and the periphery

Much analysis of the European Union (EU) has focused on the process of “ever closer union”. The Junker 2022 plan is one example of this approach. The key question in the alternative strategies outlined is the speed at which integration occurs, with a presumption that the faster the integration the greater the benefits. This study focuses instead on the fact that the EU is already a “spaghetti bowl” of different countries having different involvement in different parts of the integration process (for instance, some are outside the monetary union, and some outside the Schengen passport-free travel union). Indeed, many of those countries outside such a core have preferences to remain outside the core. This study looks at the relationships on the monetary and financial sides between the “ins” and the “outs”, where the “ins” are the countries that are in the Eurozone, while the periphery are those countries in the EU/EEA outside it—most of the countries in Scandinavia, Central, East and South-East Europe, and the UK, at least for the moment. What is the governance overlying the relationship that the Eurozone countries have on those countries outside the Zone? This study looks at the monetary institutions, as well as arrangements for macroprudential policies, where structures involving the periphery may also have helpful lessons for European institutions more generally.