EU institutional law and policy Essay Example | Topics and Well Written Essays - 3500 words

EU institutional law and policy - Essay Example10 new countries that acceded to the European Union in 2004 (Hungary, Poland, the Czech Republic, the Slovak Republic, Slovenia, the Baltic states of Estonia, Latvia and Lithuania, and the Mediterranean islands of Malta and Cyprus), all intend to join third peak of the EMU in the following(a) ten years, though their precise timing depends on various scotch factors.Similarly, those countries who are currently negotiating for entry will also take the euro as their currency in the years following their accession. Prior to adopting the euro, a member state has to have its currency in the European trade Rate Mechanism (ERM II) for two years. Cyprus, Denmark, Estonia, Latvia, Lithuania, Malta, Slovenia and Slovakia are the current participants in the exchange rate mechanism(Economic and financial Union of the European Union, en.wikipedia.org, referred on 06.05.2006)1The main objective of the euro is to maintain price stability within the European Union, and at the same time support EU general economic policies, such as the ruler of an open market economy, with free competition.Within monetary policy, the euro area countries must manage public finances so as to guarantee a sustainable growth, as envisaged in the EU Treaty. A stability and harvest-feast Pact was adopted, through which all Member States acknowledged the need of a sound financial policy for the smooth functioning of the EMU.The Pact comprises three legally binding elementsA resolution passed by the European Council that lays down a firm commitment of its Member States, Commission and the Council to implement the Stability and Growth Pact. A Council regulation that calls for the strengthening of the surveillance of all budgetary positions and co-ordination of economic policies. The key features of these programmes are the specification of national medium-term budgetary targets set close to balance or in surplus. This allows countries to pursue ant i-cyclical fiscal policies without breaching the 3% reference value of the deficit.The Stability and Growth Pact is a Council regulation on hie up and clarifying the implementation of the excessive deficit procedure. If there are no exceptional fortune and the deficit is considered excessive, the Council will immediately issue a recommendation to the Member State concerned. A supreme of four months is then allowed for the country to take effective action to correct the situation. If the Council considers that the measures are not effective, the next step of the procedure will be engaged (Stability and Growth Pact, www.bportugal.pt, referred on 06.05.2006)2As trade amidst the EU Member States mounted, the member states found EMU as the natural complement of the single