The macroeconomic surveillance mechanism of the European Union, namely the Macroeconomic
Imbalance Procedure (MIP), is based on the Scoreboard, which comprises of a set of indicators that serve as a signaling device for potentially harmful macroeconomic developments. We evaluate the early warning properties of the Scoreboard indicators with regard to financial crises. Thereafter, we analyze the role of emerging crisis signals from the Scoreboard for the subsequent step of the MIP, in which the gravity of macroeconomic imbalances is specified. The results of our study help to identify ways to improve the current set-up and ultimately to deliver more transparent and effective policy advice.