A Reform Proposal for EMU Institutions

In this paper, we discuss a reform proposal for EMU macroeconomic institutions which rests on the generalised adoption of targets, for both monetary and fiscal policies, to be integrated by a system of checks and balances. The new arrangements for fiscal policies should induce EMU countries to internalise the external effects of their own policies, therefore allowing a partial relaxation of the SGP limits to national debt policies. As for monetary policy, we propose the adoption of an inflation target, the assignment of ex-post assessing powers to the Euro12-group and an internal reform of the ECB. The latter should limit undue nationalistic influences within the ECB governing bodies.