EU Business PDF

Lecture 1 Topics: 1. Stages of economic integration 2. Methods of economic integration 3. Development of internal market 4. Concept of "market" 5. Freedoms Stages of economic integration 1. Free trade area 1. States agree to remove all customs duties and quotas...

Lecture 1 Topics: 1. Stages of economic integration 2. Methods of economic integration 3. Development of internal market 4. Concept of "market" 5. Freedoms Stages of economic integration 1. Free trade area 1. States agree to remove all customs duties and quotas on trade passing between them 2. Customs union 1. 1 + States apply a common external tariff to goods entering the Customs Union 3. Common market 1. Free movement of goods and services, free movement of labor, capital, and enterprise (factors of production) 4. Economic union 1. Common Market + Customs Union 5. Economic and monetary union 1. Complete Unification of Common and Monetary Policy Methods of economic integration 1. Host Country Model 1. Rules of the country where the economic activity takes place, apply 2. Harmonised model 1. One set of rules for the whole economic market set by an international/supranational body 3. Home country model 1. Rules that apply are the the rules of the country where a product is produced not where it is sold Development of the internal market 1. Common market (1957) 1. Original goal is to create economic independence to cement peace 2. Started with the goal to harmonize, moved to home country model 2. Single European Act (1987) 1. Internal Market: an area without internal frontiers in which the free movement of goods, persons, services, and capital is ensured 2. Qualified Majority Voting replaced unanimity in single market legislation 3. Eurozone Concept of “Market” Article 26 TFEU 1. Gives power to legislate + Obligation and task to establish and ensure the functioning of an internal market  2. Definintion: area without internal frontiers with free movement of goods, persons, services, and capital 3. Duty of the Council determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned Article 114 TFEU 1. The European Parliament and the Council shall adopt the measures for the approximation of the provisions, regulation or administrative action in Member States which aim to establish and deal with the functioning of the internal market. Freedoms 1. Freedom of goods 2. Freedom of people 3. Free movement of services 4. Free movement of capital Lecture 2 Topics: 1. Article 30 TFEU 1. Charges having Equivalent Effects i. Test Commission v Italy 2. Permissible Charges 2. Article 110 TFEU 1. Types of discrimination 2. Products in competition i. Substitutability test 3. Justifications under Article 110 1. Legitimacy and proportionality test Article 30 TFEU “Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.” Charges having equivalent effects (CEE) Any financial charge (however small and with whatever name or application) Imposed unilaterally on domestic and foreign goods Cross-border element (just because they cross the border, including internal borders) Permissible charges If the charge is applied equally to local and foreign goods Constitutes the payment for a service and is proportionate to the costs of said service It is imposed by the Union Article 110 TFEU “1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. 2. Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.” Types of discrimination Article 110(1): prohibits discriminatory taxation between similar products - Direct discrimination (strict prohibition) - Indirect discrimination (justifiable for policy reasons) Products in competition Article 110(2): prohibits differential taxation on products which are in competition Case-by-case: Product’s substitutability concept - If taxation places two products on different categories, it reduces substitutability Extent to which tax differential affect the sales Is there a protective effect? Justification under Article 110 Legitimacy and proportionality test Start with considering whether there is a freedom Is there a restriction of a freedom Is there a legitimate reason Is there a good policy reason Is the restriction proportionate Lecture 3 Topics: 1. Article 34 and 35 TFEU 1. Measures having equivalent effect 1. Types 2. Keck test 2. Distinctly applicable v Indistinctly applicable measures 3. Justifications Article 34 and 35 TFEU Art. 34: "Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States" Art. 35: "Quantitative restrictions on exports and all measures having equivalent effect shall be prohibited between Member States" Measures having equivalent effect All trading rules enacted by the Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-EU trade" (Dassonville) Types of measures - Product-bound: fall under Art. 34 - Selling arrangements: only fall under Art. 34 if they affect imports differently "in law or in fact" - In fact: - De Agostini: ban on advertising directed at children under 12 - disproportionately affects non-domestic sellers as they lack other methods to penetrate the market compared to nationals - Gourmet international: ban on advertising of alcohol on radio and television, hinders market access - When to sell goods - Where or who sells the goods - Advertisement restrictions - Product Use Rules - How a product may be used can fall under Art. 34 - Commission v Italy: towing trailers and motorcycles - Mickelsson and Roos: where to ride jetskis Keck test To check whether it is a Measure Having Equivalent Effect Does it apply to all relevant trader within national territory and Affect national and foreign products in the same way, in law and in fact Distinctly applicable v Indistinctly applicable measures Distinctly: do not apply equally to foreign and domestic goods (Art. 36 justification) Indistinctly: apply equally to all goods (Art. 36 + mandatory requirements justification) Justifications Article 36 TFEU “...public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property” Mandatory requirements Cassis de Dijon Protection of public health, defence of the consumer, fairness of commercial transactions, effectiveness of fiscal supervisions Mutual recognition concept: if a good can be marketed in one member state, this should be enough to be marketed in all member states Rule of reason, a rule is permitted if: No full harmonization Indistinctly applicable rule Justified by a mandatory requirement in the public interest Proportional (Garlic case) Be confined to the necessary to ensure the safeguarding of public health Be proportional to the objective pursued There could not have been less restrictive measures Lecture 4 Topics: 1. History 2. Things to know when dealing with Freedom of Movement of Workers and Citizens 1. Does EU law apply at all? 2. Which area of law applies? 3. What rights do migrants possess? 4. Is the national restriction in breach of EU law? 5. Is there a justification for that national restriction? 6. Is that restriction proportional? History - Begins with free movement of workers overtime it focuses on broader concepts (citizens) Treaty of Maastricht (1992) - Introduced a new concept of EU Citizenship - Rights given to anyone who is a national of a Member State Grzelczyk 2001 - ‘EU citizenship is a fundamental status of nationals of the Member States’ - Implication this is a new, separate, superior status to the previous worker's status MS Nationals - Nationals of a Member State are EU Citizens (Article 20 TFEU) - Rottmann – granting of citizenship is Member State competence, but removal of citizenship falls within EU citizenship law and must be done proportionally - Cannot remove national citizenship (and thus EU citizenship) when this would render them stateless Things to know when dealing with Freedom of Movement of Workers and Citizens 1. Does EU law apply at all? Nationality of an EU Member State - have moved to another EU Member State  - (in the case of workers, establishment, and services) are engaged in some economic activity Interstate Element - Vast majority of applicable situations involve an MS national in another MS - Carpenter suggested a low threshold to be considered movement (wife of someone doing cross-border business) Ruiz Zambrano - Colombian national parents, Belgian children born in Belgium and never left - Parents at risk of deportation, children would also have to go - Parents had derived right of residence in the EU, as deporting them would deprive the EU citizen children of ‘The genuine enjoyment of the substance of the rights’ - Following cases narrowed it down to essentially only referring to full deportation from the territory of the Union - not enough to be deported back to another Member State Economic Activity - Free movement of workers, (also establishment and services) require some economic activity to be engaged - Jundt – is required, but low threshold - Not required when EU citizenship is engaged – Baumbast 2. Which area of law applies? Article 21 TFEU – every citizen of the Union - Economically Active - Students - People of Independent Means (PIM) - Can include non-economically active (but rights more limited) Workers – services under the direction of another in return for remuneration – Lawrie-Blum - More than ‘purely marginal and ancillary’, but can include part-time - Levin - Also include job-seekers – Antonissen - Worker status can be retained post-employment in a variety of likely scenarios (Article 17(3) CRD) A "posted worker" is an employee his employer sends to carry out a service in another EU Member State temporarily, in the context of a contract of services, an intra-group posting, or a hiring out through a temporary agency. - Covered by the Directive 96/71/EC (the Posted Workers Directive) and other pieces of legislation revising and enforcing it 3. What rights do migrants possess? - Up to 3 months residence basically without conditions (Article 6 CRD) - 3 months to 5 years residence under some conditions (Article 7 CRD)  - Permanent Residence (Articles 16 and 17 CRD) - Family Members - Equal Treatment - Posted Workers Up to 3 Months Residence - Article 6 CRD - Any Union Citizen can move to and reside in another Member States for up to 3 months - Valid ID card or passport required - Family Members accompanying them or joining them - No access to social assistance if not economically active Employed or self-employed - Article 7 CRD - Have sufficient resources not to become a burden on social assistance and have comprehensive sickness insurance - Are enrolled for study, have comprehensive sickness insurance and a declaration they will not become burden on the social welfare system - Family member accompanying or joining an EU citizen engaging in one or the above Residence Beyond 3 Months - Dano - Non-economically active migrant in Germany - Sought access to social benefits - Court held: - Article 7(1)(b)CRD designed to prevent economically inactive citizens from using the welfare system to fund their means of subsistence - Lawful residence (in this case economic activity) required as a precondition for access to social welfare Permanent Residence - Article 16 CRD - Legally-resident for 5 years can acquire permanent residence - Article 17 covers a variety of less common scenarios connected to permanent residence through retirement, incapacitation, or work as a frontier worker Family Members - Family members defined in Article 2 CRD - Spouses, registered partners, direct descendants under 21 who are dependent, ascendant family members, or that of the spouse, who are dependent - Coman - Same Sex couple married in Belgium - Moving to Romania, where marriage wasn’t recognized - Court relied upon Article 21(1) TFEU and the CRD to hold that despite non-recognition there was an EU law right to move and reside. Equal Treatment - Entitled to equal treatment as an EU citizen - National rules should be neither directly nor indirectly discriminatory - Directly discriminatory – permitted only on express grounds (Articles 45, 49, 56, 21 TFEU, Article 24 CRD) - Indirectly discriminatory rules can be justified open list, e.g. - Professional ethics (Van Wesemael) - Consumer protection (Tourist guides) - Requirement of genuine link to host country (Collins) Posted Workers - Remain employed by the sending company - However, terms and conditions of employment in a number of areas are guaranteed at the same level in the host state, including (Article 3 PWD): - remuneration - leave - rest periods - protective measures with regards to pregnancy - workers accommodation 4. Is the national restriction in breach of EU law? - Discriminatory rules will always breach the Treaties unless justified - Non-discriminatory rules which hinder ‘market access’ are increasingly considered restrictions to free movement prohibited by the Treaties. - Bosman – non-discriminatory rules required a transfer fee for out-of-contract football players, resulting in difficulties finding employment for some of these individuals - Court ruled this affected workers access to free movement and employment in other countries - Principle has applied somewhat similarly to other areas in cases such as Gebhard and Viking and Laval 5. Is there a justification for that national restriction? Directly Discriminatory Measures - If a measure is directly discriminatory, only express derogations in the Treaty are available - Article 45(3) TFEU (for free movement of workers) - Public policy - Public security - Public health - Public Service expressly excluded (Article 45(4)) - not just working for the state, exercise of public powers and safeguarding of the interest of the state (Commission v Belgium) Indirectly Discriminatory Measures - Gouda established ‘imperative reasons in the public interest’, similar to Cassis de Dijon in the area of goods, e.g. - rules to protect service recipients  - protection of intellectual property - protection of workers - consumer protection - conservation of historic and artistic heritage - Non-exhaustive list, over 50 others recognized at this point across different cases CRD CRD restrictions and justifications are also based on length of residence – the longer you have been present, the more serious a reason is required for deportation. Article 27(2) CRD for residents present for up to 3 months - Public policy, security, and public health - Must be based on personal conduct and be sufficiently serious - Article 29(1) provides reference to WHO decisions on epidemic potential with regards to public health - Some further procedural protections - notification, time to leave, judicial redress (Article 31) 3 months to 5 years - Only public security and public health (Article 29(2)) - Must take into account a variety of factors including: human rights; age; integration; family and economic situation; extent of links with country of origin (Article 28(1)) Longer than 5 years - Serious grounds of public policyAfter ten years – may not be expelled unless decision taken on imperative grounds of public security - Tsakouridis lowered the bar somewhat beyond the extremities previously suspected, but still narcotic-related organized crime 6. Is that restriction proportional? - The Court needs to strike a balance between the legitimate interests of Member States, and the overall goal of free movement - Breaches and justifications are subject to both human rights and proportionality Lecture 5 Topics: 1. Checklist 1. Does EU Law apply at all? 2. Which area of free movement applies ? 3. Is the national action in breach of EU Law? 4. Is the there a valid justification? 5. Is that restriction proportional? 2. Secondary legislation 1. Services directive  2. Company law 3. Recognition of professional training 1. Does EU Law apply at all? Citizenship and interstate element - EU citizenship or location required (given this also applies to legal persons) - Interstate element – very little movement required for EU law to apply (Carpenter) - Walloon Case establishes that there are still purely internal situations with regards to services and establishment - ‘Reverse Discrimination’ of someone leaving, qualifying, then returning - No longer ‘wholly internal’ - Interstate element fulfilled, don’t want to deter citizens from exercising freedoms - Koller Economic Activity - Economic activity required to engage Articles 49, and 56 TFEU - Jundt – no need to for someone to be seeking a profit, but the activity ‘must not be provided for nothing’ Scope - Even if Member States are free to act, as it is outside of the EU’s competences, they must bear in mind the four freedoms – Viking - The internal market remains one of the most significant elements of EU law 2. Which area of free movement applies ? Freedom of establishment - Article 49 – freedom of establishment - Right for natural and legal persons to set up in other Member States (primary establishment) - Right for legal persons to set up agencies, branches, or subsidiaries in another Member State (secondary establishment) - Articles 54 and 55 refer to companies more specifically Free movement of services - Article 56 TFEU – free movement of services - Freedom to travel cross-border and provide services - Freedom to travel cross-border to receive services - cross-border services where neither provider nor recipient travels (Alpine Investments) - Article 57 TFEU provides us with a partial definition of service, and a few examples  - Service provided for remuneration, where not covered by provisions on goods, capital or persons - Article 58 TFEU adds that transport, banking, and insurance services are covered by provisions on transport and capital respectively 3. Is the national action in breach of EU Law? Restrictions and market access - Viking prohibits ‘obstacles’ or ‘restrictions’ to free movement - Broad test - Regulatory implications - Lots of legitimate public regulatory decisions fall under this test - Court has limited its effects in a few ways - excluded if the effect on free movement is too uncertain and indirect (Volksbank Romania) - suggested de minimis test, although not applied consistently - Applied differently in the areas of taxation, and company incorporation Incorporation - Establishing a new branch or company falls within the freedom of establishment Two predominant legal theories of incorporation, used in different Member States - Real Seat theory – company is to be established under the law of the state where its operational headquarters is, even if formally incorporated elsewhere - Incorporation theory – a company is governed by the law of the state where it is formally incorporated. Case: Daily Mail Despite freedom of establishment, CJEU has declined to recognise an unrestricted right to transfer your management, control, and administration from state A to state B whilst retaining their status in state A. Thus, states can still have limitations on company movement, provided they are proportional and legitimate Taxation - Potentially frequent barrier – higher taxes disincentive movement - No power to harmonise - Companies only likely to challenge higher taxes, resulting in cherry-picking - Movement towards EU law following internationally-agreed upon norms - ACT Group Litigation and FII (No 1) mark a move back towards a discrimination-based approach in this area Horizontal Effects - Most judgments concern vertical effects – actions by states/organs of government - Can also concern actions by private actors, resulting in potentially problematic implications Cases: Viking and Laval Both cases, use of posted workers or internal market freedoms resulted in strike action, due to attempts to use these freedoms to implement lower wages and working conditions Strike action, in attempting to limit the use of internal market freedoms, could constitute a restriction to those freedoms 4. Is there a valid justification? - Directly discriminatory measures require express derogations - Article 52(1) - public policy, public security, public health - Article 51 - public service exception once more - ‘Direct and specific connection with official authority’ – Reyners - Article 62 applies these Treaty justifications to services as well as Establishment Public Interest Justifications - Similar to previous areas, non-discriminatory measures can be justified with a wide range of ‘objective justifications’ (Gouda) - Also known as ‘imperative reasons in the public interest’ with regards to services (Van Binsbergen) - Examples include: - safeguarding financial markets (Alpine Investments) - prevention of gambling (Schindler) - reducing crime and fraud (Schindler) - press pluralism (Gouda) - combating money laundering (Jyske Bank Gibraltar) 5. Is that restriction proportional? - Suitable to achieve that aim - No more restrictive that necessary - Often repeat lines of case law in this area, e.g. gambling case law - Results in detailed precedent on proportionality calculations - Viking and Laval - Fundamental right to collective action and striking balanced against the freedoms of EU law - Judgment faced extensive criticisms on labour rights grounds - Demonstrates extent of CJEU’s commitments to internal market freedoms, even when clashing with human rights 2. Secondary legislation Services directive - The Services Directive (Directive 2006/123) - Covers establishment and services - Extremely controversial piece of legislation - Services 2/3rds of Europe’s GDP - Areas frequently seen at risk from foreign competition from other EU Member States - Often sensitive areas where undercutting of standards seen to be a particular risk Services not excluded explicitly (Recital 33 of the Directive for examples) As a result, somewhat eclectic collection of services covered - business services - legal and fiscal advice - real estate - tourism - tour guides - elderly support services - construction Four main pillars 1. Easing freedom of establishment and provision of services 2. Administrative simplification 3. Strengthening rights of recipients of services 4. Promoting quality of services - Establishment provisions cover - authorisation schemes - other requirements - Authorisation schemes must be: non-discriminatory; justified by an overriding reason relating to the public interest; and with no less restrictive measure available (Article 10) - Article 14 lists eight requirements that are prohibited - Article 15 lists eight more which are ‘suspect’ based on the CJEU’s establishment case law - Services provisions contain several things - A requirement to ‘respect the right of providers’ - A requirement for the Member States to ensure free access to service activities - Seven particularly suspect requirements - Express derogations (Article 17) - Case-by-case derogations (Article 18) Company law - Public and private companies generally established under national law - Examples have included legislation covering the following: - Disclosure requirements - Maintenance of capital - Mergers - Take-over bids - Shareholders rights - Use of digital tools and processes Recognition of professional training - Directive 2005/36 - Followed by other pieces of legislation - Aimed at helping those seeking to practice in another  - Directive 2013/55 – ‘European Professional Card’ and ‘Common Training Frameworks’ Lecture 6 Topics: 1. The legal framework and its origins 2. Scope of the capital rules 3. Restrictions, Express derogations and Justifications 4. Economic and Monetary Union The legal framework and its Origins The Free Movement of Capital ➔ Most recent and the broadest freedom ➔ Restrictions on capital movements and payments have been prohibited since the Maastricht Treaty Objective: ➔ All restrictions on capital movements between Member States and between Member States and third countries should be removed, with exceptions in certain circumstances. Before the Maastricht Treaty: ➔ Rules on Capital were limited ➔ Capital movements closely linked to the stability of economic and monetary policy of MSs ◆ liberalization of capital took longer ➔ Treaty of Rome restrictions were to be removed only to the extent necessary for the functioning of the common market. Why is it different from other freedoms? ➔ Casati (Case 230/80): Art 67(1) EEC was different from other freedoms in that it did not have direct effect ➔ MSs are very much in driving the seat of capital liberalization Directive 88/361/EEC: ➔ Art. 1(1) Member States shall abolish restrictions on movements of capital taking place between persons resident in Member States ➔ The directive is now replaced by the new Treaty rules on the FMC but is still used to define the notion of capital movements. Timetable of events: 1 July 1994 → Beginning of second stage  ➔ All MSs had to comply with, inter alia, the provisions on free movement of capital (today’s Art.63(1) TFEU) ➔ Establishment of European Monetary Institute (predecessor of European Central Bank) 1 January 1999 → Third stage began ➔ when for the Eurozone states the national currencies were replaced by the single currency 1 January 2002 → Euros ➔ euro coins and notes were put into circulation Scope of the Capital Rules Definition of Capital: Free movement of capital - TFEU Article 63 “All restrictions on the movement of capital” and “all restrictions on payments” “between Member States and between Member States and third countries shall be prohibited.” ➔ No exact definition ➔ The CJEU often looks to the annex of Directive 88/361 for guidance as to what constitutes capital Examples by the CJEU of capital: ➔ Mortgages ➔ Investments in real property ➔ Its administration ➔ Its sale ➔ portfolio investments Where does this freedom apply? ➔ Intra-State Movement ◆ Within the EU, between Member States ➔ Between EU MSs and Third Countries ◆ Broad approach Reasons for broad approach ○ Single currency bolstered by liberalization ○ Extension contributes to the principle of an open market economy expressed in Art. 119TFEU Limitations on broad approach: 4 Potential Restrictions 1. Historic: MS may maintain restrictions on direct investment and other transactions which existed on 31 December 1993 (Art. 64(1) TFEU ‘grandfather clause’), 2. Potential: a. COU may also, after consulting the EP, unanimously adopt measures which constitute a step backwards in the liberalization of capital movements with third countries. (Art. 64(2) TFEU)  b. COU and EP may adopt legislative measures involving direct investment, establishment, provision of financial services or the admission of securities to capital markets. (Art. 64(3) TFEU) c. COM or COU, on application from a MS, can adopt a decision ‘stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties in so far as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market.’ (Art. 65(4) TFEU) 3. Balance of payments: Art. 66 TFEU covers emergency measures vis-à-vis third countries, limited to a period of six months. 4. Political: Art. 75 TFEU EP+COU administrative measures to combat terrorism The direct effect of Art. 63TFEU ➔ In Sanz de Lera (Joined cases C-163, 165 and 250/94) the Court ruled that Art.73b(1)EC, now Art.63(1)TFEU, was directly effective ➔ Vertical direct effect: quintessentially vertical subject matter Restrictions, Express derogations and Justifications Restrictions There are 2 different approaches: 1. The Discrimination Approach: ➔ Prohibited on 3 different grounds ◆ Nationality ◆ Place of residence of the parties ◆ The place where such capital is invested ➔ Direct/Indirect discrimination ◆ Most case law concerns direct discrimination (Case C-367/98 Commission v. Portugal) ◆ Indirect discrimination: harder to find (Case E-2/06 EFTA Surveillance Authority v. Norway) ➔ Non-Discriminatory National Rules ◆ Golden Share cases of 2003 CJEU followed Alpine Investments –non-discriminatory measures that hindered access to the market breached Art.63(1) TFEU unless they could be objectively justified. (Case C-98/01 Commission v. UK) 2. The restrictions/obstacles-based approach: ➔ Exaples: ◆ A measure taken by a MS to prevent its residents from obtaining loans in other MSs. ◆ A national restriction on the acquisition and disposal of property ◆ A national prohibition on the creation of a mortgage in a foreign currency ◆ Obligations posed by the ‘golden share’ holder Express Derogations Treaty Provisions: ➔ Art. 64 TFEU: ‘grandfather’ clause ➔ Art. 65(1) TFEU: express derogations: ◆ Art. 65(1)(a) TFEU - direct taxation remains in the remit of MSs so long as no discrimination based on nationality ◆ Art. 65(1)(b) TFEU: ◆ Art. 65(3) TFEU: the restriction cannot constitute a means of arbitrary discrimination measures justified on the grounds of public policy or public security – must be proportional measures intended to ensure the effectiveness of fiscal supervision ◆ Art. 65(3) TFEU: the restriction cannot constitute a means of arbitrary discrimination Economic and Monetary Union Historic Progression Implemented in 3 stages: 1. Stage 1: Closer coordination of economic and monetary policies, free movement of capital a. Starting on 1 July 1990 – free movement of capital realized under Directive 88/361 b. closer cooperation of economic and monetary policies, closer cooperation between central banks and the free movement of capital 2. Stage 2: Monetary policy gradually transferred to EC, European System of Central Banks, Narrower Fluctuation bands a. 1994 b. European Monetary Institution set up 3. Stage 3: Full handover of monetary matters to the Community: Monetary competence transferred to the EC, Fixed exchange rates between national currencies, European currency a. 1999 b. EUR is formally introduced as the virtual single currency + exchange rates between national currencies are fixed irrevocably Pros: ➔ Transparency in the market, consumers can compare prices ➔ Traders may set prices without having to hedge risks in case of exchange rate fluctuations ➔ Larger companies do not have to scatter their plants across the EU to reduce the risk of ER fluctuation, optimize size and production costs ➔ Strong monetary union attracts foreign investment (stable currency: low inflation, low interest rates) Cons: ➔ Allowing the exchange rates to fluctuate acts as a shock absorber for disturbances that impact on partner economies ➔ Loss of monetary autonomy for Mss -> states lose the chance to regulate interest rates to promote or resrict growth ➔ With countries being in different economic cycles, a single currency would serve to accentuate differences European Central Bank: ➔ Has legal personality and is independent (Art.130) ➔ The independence of the ECB is conducive to maintaining price stability. ➔ Responsible for monetary policy ➔ Can issue recommendations/opinions (non-binding) and can impose fines ➔ Maintains price stability