Is a European Monetary Fund needed?

French President Emmanuel Macron and German Chancellor Angela Merkel hold a press conference at an EU summit
Emmanuel Macron and Angela Merkel agree on the need for a European Monetary Fund, but don’t see eye-to-eye on how it should function (source: dpa)
  • There is no economic justification for creating a European Monetary Fund
  • However, there are political reasons galore
  • The main players’ visions of how an EMF should look vary greatly
  • It will probably be little more than a beefed-up European Stability Mechanism

Before the end of the year, the European Commission plans to publish its first proposals for the establishment of a European Monetary Fund (EMF). The idea of a new vehicle to deal with eurozone debt crises has been floated since 2010, when it was proposed by the German government. At the time, it was kicked into the long grass, on the argument that it might require changing EU treaties. Now, the proposal is back at the top of the agenda. However, beyond political agreement on the need of something like it, there are big differences in the visions of what the EMF should accomplish and how it should be run.

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