11 February 2016

EurActiv: Merkel and Hollande devise a plan for the future of the eurozone

The two leaders are expected to unveil a joint proposal on the future of the eurozone by the end of 2016, once they have set aside their own differences over how to pursue integration.

For Germany's Minister of Finance Wolfgang Schäuble, the situation is clear: whatever differences may exist, progress is vital. "Europe is currently facing major challenges. It is our shared responsibility to move Europe forward," he said.

Known as a strong advocate of tight monetary and fiscal policy, the minister spoke at the 48th French-German Economic and Financial Council, a biannual discussion forum held between the two countries.

Points to clarify

"François Hollande and Angela Merkel will make a joint proposal on the integration of the Economic and Monetary Union by the end of the year," said Michel Sapin, the French minister of finance. This proposal is likely to be a compromise between Hollande 's desire to create a real eurozone budget, along with a separate eurozone parliament, and Merkel's more cautious position.

But if the two leaders are clearly eager to work together, the project has so far made little concrete progress. [...]

But major disagreements between France and Germany over bank deposit guarantees, the last pillar of the banking Union, have held up progress.

So it was on this subject that the ministers attempted to smooth over their differences. "It is not possible to make progress on solidarity if there is no solidarity between the banks," Jens Weidman the president of the German central bank, stressed.

Sapin's response was similar. He said that "greater solidarity would only be possible with lower risks", and that it was important to advance simultaneously on both issues.

The establishment of a deposit guarantee scheme would mean in effect that banks in countries like Germany could come to the rescue of the Spanish banks, should the need arise. But the risk of bank defaults in Southern Europe still appears far greater, and this has made the bigger EU countries cautious.

More integration to boost growth

Despite the increasingly anti-European leanings of other members of the French government, Sapin joined his German counterpart in emphasising the need for more European integration to support economic growth.

Full article on EurActiv

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