A treasury, a finance minister and the issuing of eurobonds as “safe assets” were some of the suggestions the EU Commission made last week to open talks on protecting the euro zone from crises.
These were among the main talking points at the European Commission’s flagship annual economic event.
Peterson Institute economist Adam Posen told euronews: “These are techocratic things that even if they work, would prevent bad outcomes. The Commission, technocrats never get credit for preventing bad outcomes.”
“You need something positive to create the political momentum in support of Europe, in support of the euro area. And given the recent elections, not just Macron and given the external threat that Europe faces from the U.S., from Turkey, from Russia I think it’s a positive opportunity,” added Posen.
The most controversial proposal is the so-called “safe asset”, to issue bonds in common.
Alexander Stubb, Finland’s former prime minister and finance minister argued that sooner or later it has to happen.
“We have a tendency to exaggerate short term change and under-estimate long term change. I think in the long term that’s probably the direction we are going to go but the level playing field has to start,” says Stubb.
“We cannot be in a situation that some member states are footing up the bill of all sins of other member states and there I think the Germans are right. At the end of the day we’ll get some kind of a common asset system or we get a common eurobond system but we are not talking 2020, we are talking post 2025,” Stubb explained.
Despite Stubb’s forecast other believe Germany will rule this out, fearing this could be the first step towards a eurobond system, which could put member states’ debts together.
Francois Bourguignon is an economist with the Paris School of Economics: “Unfortunately I find that it’s a very long time for the Germans to realize what is at stake in Europe these days. I completely understand their point of view that they don’t want to get into full solidarity and suddenly become responsible for the debt which has just been created by other people.
“But at the same time, if we don’t solve that debt problem in the coming years, this will be very strong handicap fro all countries in Europe including Germany,” adds Bourguignon.