From 1997 to 1999, the European Council took several decisions in order to ensure that not only general economic and budgetary policies, but also other areas of economic policy, which were of particular importance from the EU's standpoint, would be co-ordinated too. Therefore it was decided to introduce some economic co-ordination processes (Luxembourg, Cardiff and Cologne processes).

The Luxembourg process aims at co-ordinating employment policies and labour market reforms. The co-ordination is carried out by the Council, which prepares annual Employment Guidelines. They are not legally binding for Member States, but, nevertheless, have to be taken into account in their national employment action plans. The guidelines are based on the four pillars: employability, entrepreneurship, adaptability and equal opportunities. Within the framework of the Luxembourg process, which is also referred to as the European Employment Strategy, an important role is played by the Employment Committee (EMCO) formed by the virtue of the provisions of the Amsterdam Treaty. However, the key role is played by the European Commission, as it is responsible for the development of the so-called "employment package" and by the Employment and Social Policy Council, which formally adopts the guidelines. The strongest sanction is a non-binding recommendation and this instrument was used for the first time in 2000, when a recommendation was addressed to all Member States.

The Cardiff process focuses on the structural reforms of the product (goods and services) and capital markets. It is politically, but not legally binding for Member States. The process is guided by the principle of voluntary participation in jointly adopted procedures (such as continuous monitoring, exchange of information and best practices, peer pressure). Primarily, however, it is based on an extensive reporting system, so that Member States prepare and present annually their national reports on structural reforms, the European Commission - the so-called Cardiff Report, and the Economic Policy Committee - the Annual Report on Structural Reforms.

The Cologne process has established the so-called Macroeconomic Dialogue with respect to improve the interaction between fiscal policy, monetary policy and wage developments. The dialogue is carried out by the representatives of the Council, Commission, European Central Bank and social partners. The overall process objective is to work out a macroeconomic policy supporting strong, sustainable and non-inflationary growth which fosters employment. The macroeconomic dialogue is held twice a year (spring and autumn) through informal discussions at a technical and political level. Meetings are not open to the public and the content of the discussion is confidential and not disclosed to third parties.

Referring to the above co-ordination methods, the Lisbon European Council (March 2000) concluded that no new process was needed, because the existing Luxembourg, Cardiff and Cologne processes as well as the BEPGs offered the necessary instruments, provided they were simplified and better co-ordinated. At the same time, the European Council proposed to introduce a "new open method of co-ordination" of economic policies.

The accession countries have also been included in the co-ordination process. They started by performing the joint assessment of medium-term economic policy priorities together with the European Commission, and then moved on to the development of pre-accession economic programmes (PEPs), which have paved the way to the stability and convergence programmes prepared currently by Member States. The PEPs have two objectives. First, to outline the medium-term policy framework, including public finance objectives and structural reform priorities needed for EU accession. Second, to develop the institutional and analytical capacity necessary to participate in the EU and then in EMU.