This paper discusses the EU economic governance reforms toward the ECB’s monetary policy, tightening of fiscal discipline and correction of the economic imbalance after the EU sovereign crisis in order to clarify the reform issues.

The sovereign crisis had spread from Greek to other southern European nations, such as Spain and Portugal. In the course of fiscal reform in Greek, the third sovereign crisis attacked Greek in 2015 summer, which highlighted the fundamental issues of the EMU sustainability. Although the adoption of the Euro contributed to the economic growth of the peripheral nations, those nations face the economic imbalance in terms of productivity, Unit labour cost and current account of balance.

The main focus in on the question such as: do the tightening of fiscal discipline and the reforms to correct imbalance really solve the sovereign crisis in a long term? What is the main structural cause of the sovereign crisis? What reform is needed to sustain the Euro area in the future?

Firstly, section 1 examines the causes of the current account of balance in the Euro area sovereign debt nations. International capital inflow and TARGET2 maintained the finance of the current account deficit. The characteristic attributed to the prevention of the International balance of payment crisis, but to the appearance of sovereign crisis.

Secondly, section 2 analyzes the effects and abuse of the ECB’s monetary policy. While the ECB left the waiver of minimum credit rating requirements for marketable bonds by Hellenic Republic in February 2015, ECB used emergency liquidity assistance to Greek banks at the same time. Although the fact that this policy contributed to the prevention of Greece’s departure from the euro zone, the paper argues that the liquidity provision would have an influence on the Euro credibility.

Lastly, section 3 stresses the importance of the EU fiscal Union in order to finalize the EMU. However, it will be a long time until the EU succeeds in the Banking Union, the Capital Union and political union which are preconditions of the EU Fiscal Union.