Monetary union road to EU prosperity

There is a common misconception that the euro area is a monetary union without a political union. This reflects a deep misunderstanding of what monetary union means. Monetary union is possible only because of the substantial integration already achieved among European Union countries - and sharing a single currency deepens that integration.

Yet it is also clear that our monetary union is still incomplete. This was the diagnosis offered two years ago by the so-called "Four Presidents" (the European council president in close collaboration with the presidents of the European Commission, the European Central Bank and the Eurogroup). And though important progress has been made in some areas, unfinished business remains in others.

In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. In the eurozone, such one-way transfers between countries are not foreseen (transfers do exist as part of the EU's cohesion policy, but are limited in size and are primarily designed to support the "catching-up" process in lower income countries or regions). This means that we need a different approach to ensure that each country is permanently better off inside the eurozone.