The Second Stage : the Co-ordination

With all the Member States having signed in due time the Treaty on the European Union the Second Stage has come into force on 1st January 1994 as had been foreseen. This stage placed under the sign of co-ordination is the subject of the present issue which is divided into three parts : the current state of affairs, the technical survey of the instruments recently adopted in order to monitor the Member States economic policy, and the monetary co-ordination organized in the context of the European System of Central Banks (ESCB).

- The current state of affairs. While considering not so long ago that the second stage would be a short technical transition period towards the single currency, one realizes now that it will be a long, complex and tricky one because of the exchange disturbances and the hard economic difficulties undergone by most of the participants.

- The co-ordination of economic policies. From the beginning of the second stage, the institutional framework of macro-economic policy making in the European Union has changed significantly. Most rules which constitute economic union in the final stage already apply from this date onwards : the co-ordination of economic policy is based on the "broad guidelines", the "multilateral surveillance" is in place, the "excessive deficit procedure" is put into practice, the "no bail-out principle" is in force, the provisions for the freedom of cross-border capital movements are the same as in Stage Three of EMU, and, last but not least, Member States must respect certain rules in the financing of public expenditure.

- The European System of Central Banks. The co-ordination of monetary policies falls within the competence of the ESCB made up of the Member States Central Banks and of the European Monetary Institute whose vocation is to become the European Central Bank with the setting up of the final stage of the monetary union. In the course of the present second stage, the Central Banks, having gradually become independent, continue managing their national monetary policy within the framework of a co-ordination based on an official commitment in favour of price stability. In the Stage Three the European Central Bank will assume the responsibility of the common monetary policy.

The interview of a monetary authority from outside the European Union closely observing the current monetary events could serve as a conclusion.

The Editorial Board