EU states should integrate further - central bankers
Published 09/02/2016 | 02:30
Two of Europe's most powerful central bankers have called on the eurozone to form its own treasury and push forward with a quantum leap in integration to secure the single currency's future.
Germany's Jens Weidmann and France's newly appointed François Villeroy de Galhau urged member states to move towards a "comprehensive sharing of sovereignty" which would include a common 19-member treasury and an "independent fiscal council" with a eurozone parliament.
"While monetary policy has delivered a lot of support for the euro-area economy, it cannot bring about long-lasting economic growth," they wrote in Germany's 'Süddeutschen Zeitung' newspaper.
"More integration appears to be the most straightforward solution to restore confidence in the euro area."
Their comments are a rare sign of unity from the EU's most powerful founding member states, which have often diverged on their visions for the future of the eurozone.
Germany has long championed greater budgetary discipline to be at the heart of a "fiscal union", while France has favoured a more flexible investment-led approach which prioritises the creation of new institutions to bolster governance.
The central bankers' support for powerful new euro institutions goes even further than visions for eurozone reform laid out in the EU's Five Presidents Report.
However, recognising the lack of political will in many countries to transfer more sovereignty to Brussels, Mr Weidmann and Mr Villeroy de Galhau said the only alternative was for countries to move towards a more decentralised single currency "based on individual responsibility and even stronger rules".
"Fiscal rules, which have already been reinforced through the fiscal compact and the European semester in particular, would have to be strengthened," they wrote.
"We would also have to make sure that risk, including that of sovereign exposures, is properly taken into account by all stakeholders."
The eurozone has sought to strengthen its shaky institutional foundations by creating a joint bail-out fund and a common banking union, breaking the toxic link between indebted sovereigns and their financial systems.
But more ambitious plans to pool fiscal sovereignty, issue joint eurobonds and cede taxation powers to Brussels are likely to remain beyond the reach of the EU for a number of years.
"Despite all the various measures taken to improve the stability of EMU, important weaknesses in its structural framework remain," said Mr Weidmann and Mr Villeroy de Galhau.
Eurozone integration has also emerged as a major area of contention between Britain and the EU over David Cameron's bid to rewrite Britain's relationship with Brussels.
The British prime minister has pushed for the UK and other non-euro members to have a treaty-based guarantee that Europe is a "multi-currency union". He also wants a guarantee that countries outside the EMU will not have their interests rail-roaded by the 19-member bloc. (©Daily Telegraph London)