Thursday, 29 November 2012

Return of the Currency Commissioner?

The Commission has just launched a blueprint for Economic and Monetary Union (PDF). I haven't had time to read it yet, but from the EUObserver article, it looks like the idea of a Currency Commissioner has returned:

"This time frame would also see "further budgetary coordination (including the possibility to require amendments to national budgets or to veto them)," says the paper.


Other steps to consider would be giving "clear competence for the EU level to harmonise national budgetary laws and to have recourse to the Court of Justice in case of non-compliance." Final steps to full economic and monetary union would only be taken in the "longer term" and would require "major treaty reform" suggests the paper.

This would likely include a possibly large central budget with stabilisers – meaning money would be transferred to member states in trouble.

“As a final destination it would involve a political union with a central budget as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members.”"

Back in October Germany's Finance Minister, Schaeuble came up with the idea of a currency commissioner that would be able to veto national budgets. It was wrong then, and it's wrong now - federalism does not mean this sort of centralisation. As I wrote last month:

"You cannot "depoliticise" the fundamental matter of national budgets, because you cannot pretend that budgets and economic issues are simply matters of technical wizardry, with expert options being implemented for desired outcomes - desired outcomes are political matters, and deserve a meaningful airing in a publically accountable body: the national parliament. While there is an argument for certain budgetary contraints on Eurozone Member States to ensure the functioning of the common currency - in exchange for solidarity between Member States, it should be stressed - at the end of the day Member States should be able to set their own budgets.

Rather than trying to come up with tighter and more rigid and better enforced rules for the Eurozone, we should be working to divorce banks from the sovereigns to make banking a European matter within the Eurozone, and creating a system where Member States can go bankrupt, without endangering the system and with some support for recovery after bankruptcy. A flexible and politically accountable system would work much better than Schaeuble's approach - there needs to be political accountability for national budgets at the national level, and at the European level for those elements of European solidarity."

This idea should be killed off, and killed off quickly.

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