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Dinner speech by Yves Mersch, Member of the Executive Board of the ECB, at Société d’Economie Politique, Paris
[...] One of the ideas currently being discussed is a euro area-wide fiscal stabilisation function. This function could help to better cushion the economy against large macroeconomic shocks that cannot be dealt with at the national level alone. For such euro area stabilisation to work, however, we first need a significant degree of economic convergence and financial integration according to the Five Presidents’ Report.
In any case, a fiscal stabilisation function is meant to be just that: a stabilisation function. It should not be misused to introduce a transfer system through the back door.
A fiscal stabilisation function could be managed by a euro-area treasury that would be responsible for those fiscal policy decisions that are more effectively dealt with at the European level than at the national level.
Such a euro area treasury or finance ministry would clearly need a high degree of democratic legitimacy and strong parliamentary control. Any college with powers delegated from intergovernmental forums would hardly satisfy these requirements. In my view, the European Parliament convening in euro area composition would be the right body to undertake this task. It would ensure that the actions of a European finance minister are legitimised at the same level at which decisions are taken.
A high degree of democratic legitimacy also implies that a European finance minister cannot be an unelected technocrat. [...]
Any such moves towards closer fiscal integration will need time. Some of them require treaty changes for which I currently do not see political willingness. Given the urgency of the crisis, the minimum consensus was therefore to temporarily opt for intergovernmental arrangements to increase the Union’s resilience. This ought to be a temporary solution to avoid tensions of a political and legal nature between community and intergovernmental institutions. [...]
While legal doctrine is important and necessary, it needs to be free of ideological interference and must not be used for purposes that go beyond its legal nature.
If national courts claim the right to defend national sovereign prerogatives over and above the decisions of their democratically elected representatives, the legal doctrine of “constitutional identity” morphs into a political question. There is then a risk that sovereignty becomes an ideological concept. Such “sovereignism” clashes with any attempt at further European integration. It could result in a failure to complete the European integration process.
It should not be used as an excuse to opt for intergovernmental arrangements where supranational solutions would be more conducive to achieving a genuine Economic and Monetary Union. The European integration process has demonstrated that democratic states can share sovereignty in a number of policy areas without losing statehood. [...]