Brussels, 21/05/2012 (Agence Europe) - The president of the European Council, Herman Van Rompuy, says that the EU's leaders should have an open, plain-speaking, no-holds-barred debate on the future of economic and monetary union (EMU) at their dinner meeting in Brussels on Wednesday 23 May to decide on an EU growth agenda. In a letter to EU27 leaders on Monday 21 May, he said it was time to start considering potential sea-changes to EMU and in many cases, the prospect of moving in the direction of a more integrated system would boost confidence in the euro and the European economy in general.
In order to put an end to the sovereign debt crisis, the idea of pooling some of the eurozone debt keeps coming up. The new French president, François Hollande, talked about it at the Camp David G8 summit at the weekend (see related article), saying that throughout the period leading up to 23 May, other ideas can be put forward, including eurobonds, for which Hollande is not alone in calling. Italy backs the idea, but not Germany, which sees eurobonds as beyond the pale (likewise for changing the ECB's rules and mission).
The European Commission backs the idea of partially pooling eurozone debt, adding that this would inevitably be a key and symbolic stage in the building of Europe and would require stronger economic surveillance at EU level. “It would make economic sense to create a deep, liquid and stable market for government bonds with the joint issuance of common debt - eurobonds. At least, once we have reinforced our economic governance further to ensure fiscal prudence and thus avoid moral hazard”, said Euro Commissioner Olli Rehn last week, at a conference at St Antony's College in Oxford. A spokesperson for Rehn said that the “two-pack” of draft legislation to alter the Stability and Growth Pact was an important stage in moving towards the rules needed to launch eurobonds.
At the end of November 2011, the Commission published a Green Paper on three eurobond options involving varying levels of responsibility among member states for the pooling of debt (see EUROPE 10501). Another idea is backed by the European Parliament (see EUROPE 10615) and mooted by German economists - the creation of a redemption fund to partially pool the excess debt of all eurozone nations.
Growth agenda. Van Rompuy said four items on the European growth agenda would be signed and sealed at the end of June, namely healthy economic policies based on growth-promoting budget consolidation (the Commission will be presenting to Europe's leaders stability programmes and reforms); EU value-added like the European patent, energy efficiency and trade; improving financing of the real economy (increasing the EIB's capital, making better use of the Structural Funds, using the multiannual financial framework to stimulate growth and possibly setting up a financial transactions tax); and national and EU measures to encourage job creation (improving professional qualifications and the EURES website, making it easier for workers to change jobs and making pensions portable). (MB/transl.fl)