Eurozone Reform? "Completing Europe's Economic and Monetary Union"; Five Presidents' Report

From Deutsche Welle

"European Commission chief Jean-Claude Juncker suggested Monday concrete steps to stabilize the eurozone, including tighter joint control over member countries' economies and stricter punishment for those that flout fiscal requirements. The report, bearing the official title, "Completing Europe's Economic and Monetary Union," was commissioned last year by EU leaders hoping to map out ways to prevent the kind of instability seen in the last few years amid a global recession. It included short-term measures that could take effect within two years, such as a common bank deposit insurance system, but also longer term ideas that were also more ambitious, like establishing a common eurozone treasury. Juncker authored his report alongside four other top EU officials, including European Central Bank chief Mario Draghi, European Council President Donald Tusk, European Parliament President Martin Schulz and Jeroen Dijsselbloem, head of the finance ministers of the euro group".

"It called for greater efforts to lift employment and said audits of national budgets should be more "forceful" in order to reform shaky pension systems".

EU Commission: Five Presidents' Report, Press Release

Extract:

Towards Financial Union
Economic and Financial Union are complementary and mutually reinforcing. Progress on these two fronts must be a top priority in Stage 1. As the vast majority of money is bank deposits, money can only be truly single if confidence in the safety of bank deposits is the same irrespective of the Member State in which a bank operates. This requires single bank supervision, single bank resolution and single deposit insurance. We already have achieved the goal of single bank supervision. A Single Resolution Mechanism has been agreed with a Single Resolution Fund (which will become operational on 1 January 2016). As a next step, the five Presidents propose the launching of a European Deposit Insurance Scheme (EDIS) under Stage 1 which could be set up as a re-insurance system at the European level for the national deposit guarantee schemes.

Towards Fiscal Union

Unsustainable fiscal policies not only endanger price stability in the Union, they also harm financial stability. In the short run (Stage 1), the five Presidents propose the creation of an advisory European Fiscal Board which would coordinate and complement already existing national fiscal councils (see Annex 3). It would provide an independent analysis, at European level, of how budgets perform against the economic objectives set out in the EU fiscal governance framework. In the longer term (Stage 2), a common macroeconomic stabilisation function should be set up to better deal with shocks that cannot be managed at the national level alone. It would improve the cushioning of large macroeconomic shocks and make EMU more resilient. Such a stabilisation function could build on the European Fund for Strategic Investments as a first step, by identifying a pool of financing sources and investment projects specific to the euro area, to be tapped into.

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Analytical Note (pdf)

Update from Kathimerini/Reuters - Greek deal or not, the euro is now a different beast