The Four Unions 'PIE' on the Monetary Union 'CHERRY': A New Index of European Institutional Integration

46 Pages Posted: 12 Mar 2015

See all articles by Ettore Dorrucci

Ettore Dorrucci

European Central Bank (ECB)

Demosthenes Ioannou

European Central Bank (ECB)

Francesco Paolo Mongelli

European Central Bank (ECB); Goethe University Frankfurt

Alessio Terzi

Hertie School of Governance

Date Written: January 13, 2015

Abstract

This paper presents a European Index of Regional Institutional Integration (EURII), which maps developments in European integration from 1958 to 2014 on the basis of a monthly dataset. EURII captures what we call: (i) the “Common Market Era”, which lasted from 1958 until 1993; and (ii) the first twenty years of the “Union Era” that started in 1994, but gained new impetus in response to the euro area crisis. The paper complements the economic narratives of the crisis with an institutional approach highlighting the remedies to the flaws in the initial design of Economic and Monetary Union (EMU). In fact, since 2010, EMU’s institutional framework has been substantially reformed. While work on EMU’s new governance is still in progress, the broad contours of a “genuine union” have been outlined in the Four Presidents’ Report of December 2012. The report envisages a more effective economic union, a fiscal union, a financial union, and a commensurate political union. The aim of the EURII index is threefold: (i) to provide a tool to synthesise and monitor the process of European institutional integration since 1958 and, in particular, track institutional reforms since 2010; (ii) to expand a previous integration index by showing that monetary unification – which was initially understood as “the cherry on the Internal Market pie” – implied a major discontinuity in the process and nature of European integration, that is, a new “pie on the cherry”; and (iii) to offer a tool for further research, policy analysis and communication.

Keywords: economic and monetary integration, Euro, institutions and governance, financial deepening and integration, sovereign crisis, Four Presidents' Report, optimum currency area

JEL Classification: F33, F42, N24

Suggested Citation

Dorrucci, Ettore and Ioannou, Demosthenes and Mongelli, Francesco Paolo and Terzi, Alessio, The Four Unions 'PIE' on the Monetary Union 'CHERRY': A New Index of European Institutional Integration (January 13, 2015). ECB Occasional Paper No. 160, Available at SSRN: https://ssrn.com/abstract=2548992

Ettore Dorrucci

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 13440 (Phone)
+44 69 1344 6000 (Fax)

Demosthenes Ioannou

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Francesco Paolo Mongelli (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Alessio Terzi

Hertie School of Governance ( email )

Friedrichstraße 180
Berlin, 10117
Germany

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