The present Analytical Note takes stock of the current state of Economic and Monetary Union (EMU).

It identifies the main shortcomings of the EMU framework that were revealed by the crisis, describes the measures taken so far to address them and prepares the ground for a discussion about the next steps.

The euro is a currency shared today by 19 EU Member States and more than 330 million citizens. In spite of the crisis, it is the second most important currency in the world, with a 24.4 % (1999: 18 %) share in global foreign exchange reserves, compared to the U.S. Dollar’s 61.2 % share. Globally, 59 countries and territories have either directly or indirectly pegged their currency to the euro.

The euro is more than a currency. It is also a political project. Our monetary union requires Member States give up their previous national currencies once and for all and permanently share monetary sovereignty with the other euro area countries.

The euro has thus created a "community of destiny" between the 19 Member States that share the euro as their currency; this requires both solidarity in times of crisis and respect by all for commonly agreed rules.

The euro area has a unique institutional setup. While monetary policy is decided jointly at European level, economic and fiscal policies remain, to a large extent, in the Member States’ remit. In such a setup, vulnerabilities in one Member State can become vulnerabilities for the euro area as a whole.

Economic success is therefore in everyone’s common interest. A monetary union will only be successful if being inside monetary union brings, over time, more benefits as compared to staying outside. For this, all Member States have to take ownership by considering their economic and fiscal policies as a matter of common concern.