There is a general consensus that monetary stability in Economic and Monetary Union (EMU) requires sustainable public finances of the member states. But how can a sufficient degree of budgetary discipline be maintained in Stage three of EMU?

To answer this question, this study provides an empirical analysis of the budgetary consolidations in the EU member states by carrying out an analysis of:

• the importance of the quality of the budgetary adjustment for the success of the consolidations;
• the anatomy of fiscal adjustment processes in the EMU member states during the 1990s;
• the quality of the budgetary institutions of the member states and the changes in these institutions that have occurred during the 1990s;
• the macroeconomic aspects of fiscal consolidations.

The results of the analysis support the proposition that, in order to maintain a high degree of sustainability in Stage three of EMU, attention might shift away from the numerical criteria regarding overall deficits and debts, and focus more on the quality of fiscal adjustments and of the institutions governing public finances in the member states.