CONTENTS MARZO-ABRIL 2000 NUMERO

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1 FERNANDEZ RODRIGUEZ, Vicente Javier Euro Exchange Rate Policy: Institutional and Economic Issues Abstract: The present paper describes the institutional aspects of euro exchange rate policy. The first part of the study describes the way Ecofin (with the votes of the countries that have adopted the euro only) reaches decisions and negotiates the euro exchange regime with third countries in the framework of the international monetary system and formulates exchange rate policy guidelines intended for the Eurosystem on the grounds of ECB and Commission recommendations and advice. The second part evaluates the consistency of the policy mix in the euro area and analyses the possible under-valuation of the euro or overvaluation of the dollar in terms of their respective cyclical positions and the structural elements of the two economies at this time. The author concludes that the euro area is well positioned to negotiate, as appropriate, concerted action on currency markets with United States authorities. Key words: European integration, monetary policy, exchange rate policy, exchange rate, euro, UME. JEL Classification: E52, F36. GOMIS DIAZ, Pedro Luis Consideration of European Employment Strategy from Amsterdam to Lisbon (June 1997 to March 2000) Abstract: This article intends to explain and evaluate the new provisions on employment in the Amsterdam Treaty and their application. Since the Amsterdam agreements, Community action in the area of employment has largely hinged on the Co-ordinated Strategy for Employment set out in Article 25 and, in particular, on the application of article 28 which establishes the socalled Luxembourg process or the formulation, for the first time in Community history, of employment guidelines and recommendations for all fifteen States Members. Spain is no mere spectator with respect to these objectives and reforms, since virtually all its proposals are reflected in the Lisbon conclusions and in its Stability Programme it has undertaken to create, by year-end 2003, over 20 per cent of the total employment envisaged for the entire Union. Key words: employment common policy, job creation, full employment, EU, Spain. JEL Classification: F02, J20, J60, J68. GONZALEZ IBAN, Roberto Euro Fiscal Policy and the Stability and Growth Pact Abstract: The subject of Economic and Monetary Union members fiscal policy poses a number of inter-related questions. The first is the independence of the European 186

2 Central Bank (ECB) with respect to national Governments and the possible rift between the monetary authority and economic authorities in their respective actions: on the one hand, the ECB whose primary objective is price stability and on the other, Governments whose fiscal priorities are conditioned by the need to minimise the cost of their debt (debt servicing). In connection with these interactions, a second question addresses the scheme for co-ordinating monetary and fiscal policies in the EMU, a scheme that turns on the limitations to public financing in the euro countries as set out in the Amsterdam Treaty and the Stability and Growth Pact in response to a three-pronged rationale: the implementation of common monetary policy and in particular, the stability of the European Union s financial system, as well as the independence of the European Central Bank. In the discussion of the third of these issues reference is made to the asymmetric nature of the co-ordination scheme, based on limitations to public finances. Key words: European integration, monetary policy, fiscal policy, Community policy, economic convergence, economic stability, EMU, ECB, EU. JEL Classification: F36, F42. HERNANDEZ GARCIA, Gloria and GARZON MORALES, Francisco J. Co-ordination of Economic Policies in the EMU Abstract: Few terms have been used as profusely in Community discussion fora and institutions as the expression co-ordination of economic policies, although it is as broad, vague and interchangeable with others as the word co-operation. The purpose of this article is to define what is meant by co-ordination of economic policies on the international scale, provide a theoretical justification of the concept and analyse its application and content in the context of the EU and Economic and Monetary Union. To do so, the authors first broach the present status of the co-ordination of economic policies that are still the responsibility of national authorities, to then analyse co-ordination between fiscal and monetary policy, and finally address the external representation of the euro as a way of co-ordinating Member State action with respect to third countries. Key words: economic policy, fiscal policy, monetary policy, Community policy, economic convergence, EMU, ECB, Ecofin, euro. JEL Classification: F02, F36, F42. HERNANDEZ LOPEZ, Manuel Ex Post Facto Remuneration of Labour in the Economic and Monetary Union Abstract: The purpose of this article is to analyse the reasons for and consequences of ex post facto remuneration, as yet another feature of labour market flexibility. Under such a 187

3 system, part of the worker s salary should be established in terms of the company s profits, once determined and booked at year-end. The first part of the paper discusses the reasoning on which this adaptation of salaries to the company s financial situation is based and describes how it may be done. The second part analyses the consequences of the system for incomes, social harmony and employment; and finally, a third section poses the practical and administrative sides to the question, from the domestic and community standpoints. Key words: labour economics, employment, conditions of employment, wages, profits sharing, EMU, EU. JEL Classification: J30, J32, J33. JIMENEZ LATORRE, Fernando and ROMANA GARCIA, Belén Structural Reform Policy and the Cardiff Process Abstract: The article analyses the present and future of European structural reform. Firstly, the authors discuss the theoretical reasons justifying the need to flexibilise and liberalise goods markets, services and production factors. Then they set forward the advantages of adopting a co-ordinated approach at the European scale and describe the coordination procedures established. Finally, they evaluate the progress made in structural reform in the European Union and Spain. Key words: structural reform, economic cooperation, European integration, European single market, economic policy, economic liberalization, EU, Spain. JEL Classification: E61, F02. MENDEZ ALVAREZ-CEDRON, José M.ª and MINGUEZ PRIETO, Rafael Financial Services Action Plan in the Context of Economic and Monetary Union Abstract: The article offers a descriptive analysis of the Action Plan, one of the studies presently under way in the European Union to culminate the construction of the Single Financial Market. This study, conducted through the Financial Service Policy Group (FSPG) translates into a heterogeneous series of financial measures, in particular regulatory measures, aimed at culminating financial integration in the European Union and fostering the efficiency and competitiveness of our markets in the international context. Key words: economic liberalization, European integration, financial policy, financial markets, securities markets supervisors, EMU, EC directive, EU. JEL Classification: F36, G

4 NUÑEZ RAMOS, Susana and LEYVA SALMERON, María Luisa Payment Systems and the Euro Abstract: The advent of TARGET has had a convulsive effect on large value payments. This system, created by integrating the national payment systems handled by each of the EU central banks, is intended to build a safe and efficient system of large value interbank payments within the Union. The Bank of Spain s Settlement Service, the Spanish member of the TARGET system, has undertaken the necessary reforms to participate in the new European payment system. In the area of retail cross-border payments, greater efficiency is sought from existing mechanisms to facilitate the transfer of funds effected by businesses and consumers, enabling them, along with the issuers of large value payments, to benefit from the introduction of the euro. Securities settlement systems have begun to undergo profound change, since the single monetary market and integrated payment system call for agile, safe and speedy security recording and settlement systems for both domestic and cross-border security mobilisation. Key words: financial markets, money market, means of payment, clearing bank, central bank, EMU, EC directive, ECB. JEL Classification: E58, G15, G18. ORTEGA REGATO, Eloísa Monetary Policy in the Euro Area Abstract: This article describes the main features of single monetary policy, after the first full year of operation of the Eurosystem, beginning with a discussion of certain institutional aspects of Economic and Monetary Union and their implications for the distribution of jurisdiction in economic policy decision-making. This is followed by an analysis of the elements defining single monetary policy, in particular, the analytical framework and series of variables used by the Eurosystem to set the appropriate tone for such policy. Attention is drawn, in this regard, to the establishment by the ECB of a medium term, quantitative definition of price stability and the use of a very broad series of indicators to analyse price prospects in the euro area. The article concludes with a description of single monetary policy in the time lapsing since its institution. Implementation of this policy has been conditioned by the upward turn in inflation in the area, which ultimately dampened inflation prospects in the EMU in a context of expectations of improved growth beginning in the second half of Key words: European integration, monetary integration, monetary policy, price stabilization, interest rate, monetary authority, EMU. JEL Classification: E52, F

5 PARAMIO FERNANDEZ, Javier Tax Policy in the European Union Abstract: The process of approximation of Community country tax systems has been a very long-term ambition in which the progress made to date has been more significant in the area of indirect taxation. This process is now in a what may be termed a critical state, due, on the one hand, to the difficulties met in connection with the so-called «tax package» planned for sensitive sectors of direct taxation, and on the other to the necessary revision of the model for indirect taxation, whose prime example is the Value Added Tax. This revision, scheduled to be implemented hitherto, continues to meet with obstacles that will not foreseeably be overcome any time in the near future. The article below addresses this issue, with the aim of reflecting the present status of the process of approximation of European Union tax systems as denoted by the questions presently being debated and the projects planned for the near future. Key words: taxation, tax harmonization, Community policy, Community law, indirect taxation, VAT, EC directive, EU. JEL Classification: H2, H87. PEREZ MENAYO, Vicente Modernisation of Social Protection in the European Union in the Face of Twenty-first Century Challenges Abstract: The analysis of social protection spending in Community countries reveals substantial differences among Member States. Nonetheless, the gap has tended to narrow in the last decade. Moreover, the reforms introduced in recent years in the area of social protection respond to common objectives and challenges, which will allow for gradual approximation of institutional content in European Union social protection systems that is to say, convergence among European Social Security systems. The «Concerted Strategy to Modernise Social Protection» presented by the Commission in 1999 represents an attempt to establish a common strategy in the area of social protection on a scale similar to the European Employment Strategy. Key words: social policy, social protection, welfare state, job creation, social benefits, Social Security, EC directive, EU. JEL Classification: H55, I38. SANCHIS I MARCO, Manuel Macroeconomic Shocks, Adjustment Policies and Labour Market Adaptability in the EMU Abstract: This article describes the labour market situation and causes of unemployment in Europe. It reviews the adjustment policies in the hands of the euro area member 190

6 countries in the face of macroeconomic shocks and discusses the adjustment problems in European labour markets in the framework of Economic and Monetary Union. A new concept of labour market «flexibility» is proposed that goes beyond the present measurement of legislative «rigour» in hiring and dismissal terms and takes account as well of the more structural characteristics of the labour market, such as skill gaps, the ability to use new technologies, labour mobility and so on. Key words: macroeconomic analysis, employment flexibility, unemployment, labour market, adjustment policy, labour reform, EMU, EU. JEL Classification: J20, J