Importance of Economic Governance in the EU Accession Process

The recent crisis in Europe has urged the EU to take further steps in ensuring macro-economic and financial stability, and to improve its economic governance. These adjustments, are further reflected on the requirements of the accession process, which countries are facing on their way to join the European Union.

With the change of reporting lines and increased stress on economic factors and economic convergence already before the entering, national central banks (NCBs) are much more involved than they were in the past. With the new form of accession strategy documents they need to cooperate closer with other institutions. Enjoying a highly credible and independent status in the countries, NCBs are playing an important role in communicating the process situation and needed reforms, while the level of individual involvement is varying across the countries, leaving the NCBs to determine their preparedness in cooperation.

Thus, it seemed to be most suited time for the two-day conference (May 27-28) on “Economic Governance in Europe and EU Accession Process: What is the Role of Central Banks” that the CEF has attended. It was organized in Belgrade by the National Bank of Serbia, jointly with the GIZ. The conference had for its goal sharing experience and strengthening the cooperation among the NCBs of acceding countries (Albania, Bosnia and Herzegovina, Macedonia, Montenegro, Serbia, and Turkey) together with two from EU member states (Croatia and Slovenia), and ECB and the European Commission.

The participants were acquainted with the current status of Serbia’s accession, along with the extensive insight in the reformed EU economic governance with its implications, and consequently changed roles of the ECB, the NCBs, and cooperation with the European Commission. On the second day, there was an interesting panel discussion among governors and vice governors from respective countries, who reported on their progress and challenges they are facing.

As noted at the conference by several speakers, accession process itself represents an additional fiscal burden to acceding countries, which is only partially leveled by the Instrument for Pre-Accession Assistance. Apart from that, the process adds pressure to national institutions, including central banks. Workload is normally increased. This derives for example from additional and more extensive reporting and communicating lines, representing the central bank at various boards and committees. The central banks have to expand their external governance.

Among other discussed topics was visibility of NCBs in producing of reports and representation of their countries, better coverage of negotiations, ensured by a given formal mandate, while still keeping their independent status, giving objective proposals on undertaken economic policies and needed structural reforms. Much stress was put on structural reforms needed for better resilience to risks and external shocks. Also, they discussed using of EU technical assistance mechanism, developing institutional capacity and coordination with the EU in terms of the need for institutional restructuring to develop a more efficient internal governance.