Changes in the Economic Governance of the European Union

The debate on monetary unification in Europe and the creation of a single European currency was launched in the 1970s. The Single currency came into being in 1999. Potential failure of the project initially hailed for its numerous benefits (mainly reduction of transaction costs and increase in trade volume), could paradoxically divide the European Union and intensify distrust in the process of European integration. Consequently, the foundations of the internal market, one of the greatest achievements of economic cooperation among all 28 Member States, could be irreversibly disrupted. This paper, based on a brief overview and evaluation of measures taken in economic policy over the last four years, highlights the development of closer cooperation between the 17 euro area states and briefly outlines inherent risks for the remaining 11 countries not participating in this project. The brief analysis of the causes of the crisis, as set out in the first chapter, is followed by a second chapter providing an overview of the steps that have been taken in order to resolve the crisis. Finally, the actions taken are evaluated. This paper focuses not only on the economic context, but also on changes in EU economic governance.