Brussels, 11/07/2012 (Agence Europe) - On Monday 9 July 2012, the Notre Europe think tank unveiled a report by the Tommaso Padoa-Schioppa Workgroup on a “roadmap” towards Fiscal Union. The president of Notre Europe, Antonio Vitorino, said he was happy with the workgroup's work since its inception in December 2011, setting out a range of ambitious, practical visions. Vitorino said the end document looks beyond the short term to the future and how to put Economic and Monetary Union on a strong footing.
Three challenges were identified by the nine experts in the working group, headed by Henrik Enderlein, a German economist close to the SPD. Firstly, despite expectations, price differences across the eurozone have not narrowed as much as expected and this means that the “one-size-fits-all” monetary policy of the European Central Bank amounts to “one-size-fits-none” and could even widen gaps between the member states. Secondly, there is a problem with coordinating and monitoring budget policies and thirdly, because bank systems are so intermeshed, there is a high risk of problems spreading, although individual member states are responsible for supervising their own banks and drawing up bailout plans.
To remedy this, the experts make four suggestions. 1) The completion and fostering of the Single Market in order to allow the real exchange rate channel to work more effectively. 2) A cyclical insurance fund to counter some of the effects of the one-size-fits-none monetary policy, set up outside the EU budget and under the direct control of national parliaments. 3) A balancing of fiscal rights and duties in the single currency area to ensure that countries are not excluded from the money markets. Notre Europe suggests the creation of a European Debt Agency (EDA), jointly and severally guaranteed by all eurozone countries that would serve as the normal financing instrument for up to 10% of each country's GDP. The more finance requested of the EDA by a nation, the more sovereignty that nation would have to give up. 4) A Banking Union within the eurozone.
Notre Europe recommends that these solutions be introduced as a matter of urgency, but says that “the biggest danger in the current context is excessive short-termism. What is needed is a credible path to necessary change. This would rebuild trust in the single currency and in the continuation of the European integration project”. (EL/transl.fl)