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.jpg) The Euro Group or Eurogroup is a meeting of the finance ministers of the eurozone (i.e. those Member states of the European Union (EU) who have adopted the euro as their official currency). It is the political control over the euro currency and related aspects of the EU's monetary union such as the Stability and Growth Pact. Its current President is Jean-Claude Juncker. The ministers meet a day before a meeting of the Economic and Financial Affairs Council (Ecofin) of the Council of the European Union. This group is not an official formation of the Council of the European Union but under the Lisbon Treaty (due to come into force on 1 December 2009), the group would be formalised and only eurogroup states vote on issues relating to the euro in Ecofin.
[edit] HistoryThe group has no official name, but is colloquially called the "Euro Group" (formerly Euro-X and then Euro-XI in relation to the number of states adopting the euro), was established at the request of France as a policy co-ordination and consultation forum on eurozone matters.[1] In 2004 the ministers decided to elect a President (see "President" below) and in 2008, the group held a summit comprising of heads of state and government, rather than finance ministers, for the first[2] and (as of 2009) only time. Since the beginning of the monetary union, its role has grown in regards to the euro's economic governance. The fact the group meets just before the Ecofin council means it can pre-agree all Ecofn's decisions that on Eurozone affairs.[3] In 2007 the Lisbon Treaty was signed which, if it comes into force, will formalise the group and its president. [edit] PresidentThe current president of the group, dubbed Mr Euro[1] or the president of the eurozone[4], is Jean-Claude Juncker (finance minister and Prime Minister of Luxembourg). In September 2004, the Eurogroup decided it should have a semi-permanent president that is to be appointed for a period of two years. Prime Minister and Finance Minister of Luxembourg Jean-Claude Juncker was appointed first president of the Eurogroup, mandated from 1 January 2005, until 31 December 2006, and was re-appointed for a second term in September 2006.[5] Under the Lisbon treaty, this system will be formalised (see "legal basis" below). The Presidency has helped the strengthening of the group, as before Junkers appointment the Eurogroup was only 'accidentally' present at meetings in the European Parliament. Since the creation of the Presidency, the president attends Parliament's committee on Economic and Monetary Affairs every six months.[3] [edit] Legal basisAs of 2009, the Eurogroup has no legal basis. This has had some advantages as, because it is not a Council formation, it is smaller and more informal resulting in more constructive and confidential discussions than the full Ecofin Council. It also means that it does not have the usual rotating six-month presidency meaning its work is streamlined and strengthened vs the other institutions.[3] A formal legal basis will be granted for the first time under the Lisbon Treaty when it comes into force. Protocol 14 of the treaty lays out just two articles to govern the group;
Furthermore, the treaty amends the Council of the EU's rules so that when the full Ecofin council votes on matters only affecting the eurozone, only those states using the euro (the Eurogroup countries) are permitted to vote on it.[7] [edit] RepresentationOn 15 April 2008 in Brussels, Juncker suggested that the eurozone should be represented at the International Monetary Fund as a bloc, rather than each member state separately: "It is absurd for those 15 countries not to agree to have a single representation at the IMF. It makes us look absolutely ridiculous. We are regarded as buffoons on the international scene."[8] However Finance Commissioner Joaquin Almunia stated that before there is common representation, a common political agenda should be agreed.[8] [edit] Economic governmentIn 2008, in light of the 2008 financial crisis, French President Nicolas Sarkozy (speaking at the European Parliament as the outgoing President of the European Council) called the Eurogroup to be replaced by a "clearly identified economic government" for the eurozone, stating it was not possible for the eurozone to continue without it. The eurozone economic government would discuss issues with the European Central Bank, which would remain independent.[9] This government would come in the form of a regular meeting of the eurozone heads of state and government (similar to the European Council) rather than simply the finance ministers which happens with the current Eurogroup. Sarkozy stated that "only heads of state and government have the necessary democratic legitimacy" for the role. This idea was based on the meeting of eurozone leaders in 2008 who met to agree a co-ordinated eurozone response to the banking crisis.[2] This is in contrast to an early proposal from former Belgian Prime Minister Guy Verhofstadt who saw the European Commission taking a leading role in a new economic government, something that would be opposed by the less integrationist states.[1] Germany subsequently rejected Sarkozy's idea, as he had proposed economic policies to respond to the economic crisis that would be mainly paid for by German funds.[2] It is also opposed by current Eurogroup chair Jean-Claude Juncker who does not think Europe is ripe for such a large step.[1] There are other proposals to start with simply a eurozone government bond's market under the control of the Eurogroup to help with the structural deficiencies. This would help reduce German worries of it funding all the bail outs and the money raised could be used for bailing out banks or the projects of the European Investment Bank and European Bank for Reconstruction and Development. Although under the control of the Eurogroup, they would be managed by the ECB and would help create a unified and supported financial system. Such a system would run parallel to national bonds and may even draw the membership for the UK.[10] [edit] References
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