The hypothesis of treaty change should not be a hindrance to the incipient reflection on deepening Economic and Monetary Union (EMU), for instance by creating a budgetary capacity for the Eurozone countries, the President of the ECB, Mario Draghi, said on Monday 29 May.
Initiating the reflection on deepening the Eurozone “without fear of treaty change” would be a “big step forward”, Draghi told an exchange of views with the committee on economic and monetary affairs of the European Parliament. He said that to make progress, the best approach must now be based more on institutional creativity than on new rules.
Under questioning from Pervenche Berès (S&D, France), however, he declined to state whether he preferred the deepening of EMU to be based on the Community method or the inter-governmental one. The President of the Eurogroup, Jeroen Dijsselbloem, argued in favour of converting the European Stability Mechanism (ESM) into a European Monetary Fund (EMF), a body that would remain under the control of the member states. Through the 'Berès/Böge' report, the Parliament took position in favour of a budgetary capacity for the Eurozone, which countries could join under conditions and that would come on top of the current multi-annual financial framework and the ESM (see EUROPE 11725).
On Wednesday 31 May, the Commission will unveil a document on the future of the EMU in the framework of the reflection launched by the White Paper on the future of the EU. During their first meeting in Berlin, the German Chancellor, Angela Merkel, and the French President, Emmanuel Macron, did not rule out a reform of the European treaties if useful, and announced work on a roadmap towards the completion of the EMU (see EUROPE 11788).
The President of the Frankfurt-based monetary institute and one of the authors of the so-called 'five presidents' report on finalising the EMU by 2025 (see EUROPE 11340), said that creating a budgetary capacity is a “good way to complete EMU” and make it will more resistant to the asymmetric shocks that may affect certain Eurozone countries. “Any union has a federal budget”, he pointed out, adding that the difficulty was laying the foundation to achieve this.
Draghi referred to two vital pillars for the creation of a Eurozone budgetary capacity: - creating sufficient trust between the Nineteen to ensure that certain countries are not always creditors or debtors; - economic convergence through “serious structural reforms, robust budgetary policies and the finalisation of banking union”.
Brexit. When asked by Brian Hayes (EPP, Ireland) about the process of relocating banking groups from the City of London to the other countries of the EU, Draghi called for preparations to be carried out as early as possible in order to minimise the financial risks. He said that the ECB and the national supervisors would insist on full compliance with the banking prudential rules to avoid any race to the regulatory bottom.
The monetary institute will be closely following the matter of UK-based central counterparties clearing securities in euro, with this member state to become a third country. (Original version in French by Mathieu Bion)