The eurozone’s bailout arm would become a European Monetary Fund that is firmly anchored in EU law as part of an overall reform package the European Commission unveiled on Wednesday to complete the bloc’s economic and monetary union.
The EU’s executive arm’s proposals also include plans to appoint a eurozone economy and finance minister who would simultaneously serve as a Commission vice president and chair the Eurogroup, and to create EU budgetary instruments to support the economies of countries using the euro.
The Commission also wants to completely integrate national commitments to a balanced budget into the bloc’s treaties, as they are currently bound by intergovernmental agreements. Doing so would likely make it legally more difficult for governments to appeal against the fiscal rules, which would be enforced by the EU’s highest court.
The package is broken into two parts. The plans for the EMF and budget deficit rules are proposals, while communications of intent outline the Commission’s desire to introduce a eurozone finance minister and reserving parts of the EU budget for eurozone incentives.
“We need a stronger tool box [to deal with economic crises],” said Valdis Dombrovskis, the Commission vice president for the euro. “This happened in the euro once before, so we can’t have this happen again.”
The Commission’s proposals come a week before EU leaders gather in Brussels to agree on a common vision for reform. But national leaders are unlikely to discuss all of the Commission’s proposals, according to a draft agenda obtained by POLITICO.
Instead, eurozone heads of state intend to discuss how best to strengthen crisis-response capabilities and complete plans to introduce a European deposit insurance scheme to protect savers from failing banks.
Developing the European Stability Mechanism into an EMF is also on the draft agenda, although it’s unlikely that the discussion will involve roping the new body into EU law.