Munich Personal RePEc Archive

It Ain`t Broken But It Has To Be Fixed

Lorca-Susino, Maria (2006): It Ain`t Broken But It Has To Be Fixed. Published in: European Union Miami Analysis , Vol. 2, (February 2006): pp. 1-9.


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The Stability and Growth Pact (SGP) adopted by the European Council in its June 1997 Amsterdam meeting is an agreement by European Union Member States related to their conduct of fiscal policy to facilitate and maintain economic and monetary union. It basically consists of enforcement policies of mutual surveillance of fiscal positions and of an excessive deficit . By 1990s the convergence was real and the achievement on the part of the member states of the so-called Maastricht Convergence Criteria , art. 121.1 of the EC Treaty, was a requirement for all those Member States adopting the euro; that is, the so-called stage 3. However, the German Finance Minister Theo Waigel was concerned that some EU States might make a one time effort to meet the convergence criteria to qualify for the euro after which they will revert to high levels of borrowing and endanger the stability of the new currency; based on this believe the ¨stability and growth pact¨ was created.

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