Resolve The Euro Area Fiscal Discipline

European Union, as a developing integrated economy with 27 Member states, formed the most brilliant chapter in the history of economic society. EU is a unique organization which won the name of the most successful Economic and Monetary Union. The establishment of EU is a work of creativity. Since no former rules to comply with, each forward step is creation. On January 1st 2006, EURO was formally issued all through the European continent. It is the first single currency in Europe, from the ancient Roman times on. The launch of the euro has led to a seismic shift in international financial markets, and unprecedented conflict inside the EU at the same time. The Stability and Growth Pact is commonly interpreted as a major building block of EMU's architecture, however, it made the core of the European fiscal conflict. The SGP constitutes the principal fiscal discipline in Euro area, which has both preventive and dissuasive arms to ensure a stable economic growth within the European Union. At the beginning of the implementation of the SGP, it can be obeyed by most EU Member States without much difficulty. Moving on to 2001, with the fact that global economy was suffering sluggishness, key EU Member States began to breach the 3 percent deficit ceiling. Consequently, a heated debate on how to reform the framework of fiscal policy coordination in the EMU was triggered five years after its inception. Coming to 2006, the sluggishness of the last five years was shaken off; the euro area was experiencing a recovery in economic activity. When referring to the cause of that sluggishness, the European Commission pointed out that some Member States didn't reach better macroeconomic policy coordination was the critical reason.The researches by professional academic economists are mainly focused on the subjects of theory background, implementation effect, problematic rules and reform tendency of the SGP. The SGP has been the topic of heated controversy among European academics and opinion-makers ever since its inception. It is of profound significance to bring the knowledge of the European Union into China. Furthermore, the practice of the EU presents us a successful example of the economic and monetary integration. It is not adequate to know Europe, but we should absorb the experience from its development, with the purpose of guiding the economic and monetary cooperation in East Asia. This paper is arranged by the logic of theory, practice, theoretical analysis and back to practical attempt. It firstly puts forward the necessity of the fiscal rules in the Economic and Monetary Union; next comes the content and implementation of the SGP. Based on the analysis of the factual problems, the effectiveness and reasonableness of the SGP is deeply investigated. After that investigation, a large number of proposals for reforming the SGP is introduced and analyzed. At last, it presents EU's attitude towards this issue and the efforts that EU has made concerning the reform of the SGP. So far, it follows the usual methodology of the study of the SGP. The innovation of this paper lies in the subsequent part which combines the study of the SGP with the monetary cooperation in East Asia for the first time. The researches before this paper all dealt with the two topics separately, considering the low-level cooperation in the area of Asia. This paper summarizes the current situation and typical problems of monetary integration in East Asia and subsequently compares the European monetary integration with the monetary integration of East Asia. The comparison covers the fields of economic convergence, system, institution and macroeconomic policy. An important conclusion can be drawn from the comparative analysis, which illustrates that good legal atmosphere is premise, an efficient decision-making institution is media, effective surveillance is assurance, a positive attitude is acceleration, and macroeconomic policy coordination is the key point, in the course of East Asian monetary integration.