The Economic and Monetary Union: how has Malta benefitted and what does the future hold?

On Friday, the European Commission Representation in Valletta, in collaboration with the Central Bank of Malta, hosted a conference entitled ‘The Economic & Monetary Union: how has Malta benefitted and what does the future hold?’. Following the onset of the economic and financial crisis, the European Union took unprecedented measures to strengthen the Economic and Monetary Union (EMU) and ensure that Europe is better prepared for future shocks. As a result, the euro area architecture is now much more robust than before. However, further work lies ahead to ensure that the benefits of the EMU reach all EU citizens.

The conference, which was held at the Central Bank of Malta, served as both a commemoration of Malta’s 10-year anniversary since the adoption of the euro, as well as an opportunity to applaud the economic success over this past decade. It also offered a valuable opportunity to look ahead and to discuss the completion of the Economic and Monetary Union as proposed by the European Commission in its Roadmap for Action published in December 2017.

In her opening remarks, the Head of the European Commission Representation in Valletta, Dr Elena Grech, reiterated that the Juncker Commission had made the completion of a deep and fair Economic and Monetary Union one of the 10 priorities for its mandate. She underlined the fact that the Commission emphasised the idea of a ‘Roadmap’ because it believes that “we should act in the short term but also have a clear vision and determination for the medium and longer term – a sense of direction of where the EMU should be going beyond 2019, all the way to 2025.”

In a video message addressed to the participants, the Minister for Finance Prof. Edward Scicluna said : “The current favourable economic climate and the political will to deepen the EMU gives a unique window of opportunity to further strengthen the currency union, thus making it more robust. The Euro- zone crisis has revealed key weaknesses and the euro area was shown to have no public – and very little private – risksharing.”

Dr Mario Vella, the Governor of the Central Bank, presented an overview of Malta’s experience since the adoption of the euro in 2008. He said: “Our economic record also suggests that participation in a monetary union does not solve a country’s imbalances. Its benefits, while potentially significant, are neither immediate nor automatic, but require a credible policy effort. In Malta’s case, only when the pace of reform picked up in recent years and policy-makers stepped out of the comfort zone did economic indicators begin to respond in a visible and coherent way.”

The future of the Economic and Monetary Union was the subject of a panel discussion with the participation of Alfred Camilleri, Permanent Secretary responsible for Budget and Finance in the Ministry for Finance, Alexander Demarco, Deputy Governor of the Central Bank of Malta, José Leandro, Director for Policy, Strategy and Communication in the DG Economic and Financial Affairs of the European Commission and Massimo Rostagno, Director General for Monetary Policy of the European Central Bank.