Berlin continues quest for ‘European Monetary Fund’

German Finance Minister Wolfgang Schäuble and Tax Commissioner Pierre Moscovici still do not see eye-to-eye on the creation of a 'European Monetary Fund'. [European Commission]

The German government still wants to set up a European monetary fund but the European Commission does not want to surrender any responsibility for assessing eurozone finances. EURACTIV’s partner Der Tagesspiegel reports.

A dispute continues to brew about the European Stability Mechanism (ESM), from which billions of euros are flowing into the third Greek bailout programme.

German Chancellor Angela Merkel and her finance minister, Wolfgang Schäuble, (both CDU) want to upgrade and model the Luxembourg-based rescue fund after the International Monetary Fund (IMF), creating its own ‘European Monetary Fund’.

Merkel and Schäuble want this ‘EMF’ to be able to monitor the finances of all the eurozone countries. But EU Tax Commissioner Pierre Moscovici is against the idea. The reason: monitoring eurozone budgets is a competence of the Commission.

Schäuble: If IMF exits Greek bailout, EU could take over

Berlin is weighing up the possibility of the EU taking over the Greek bailout in the event that the International Monetary Fund decides to end its role in it, German Minister of Finance Wolfgang Schäuble said on Friday (13 January). EURACTIV Greece reports.

Yesterday (7 March), Moscovici was in Berlin and he met with, among others, Schäuble’s deputy, Jens Spahn, and German MP Ralph Brinkhaus (both CDU).

It is likely that the French Commissioner will continue to push for institutional involvement in the plan. Moscovici has previously insisted that a European monetary fund should “not be a totally technocratic body”.

In the past, the Commission has made its assessment of eurozone budgetary policies using political leniency, as demonstrated by the executive’s granting of a reprieve to Italy and France in 2015. It has sometimes been too lenient for Berlin’s taste.

Merkel and Schäuble’s favoured option of expanding the current bailout fund into a full-blown institution that rates the finances of the 19 eurozone countries would be a significant step forward in the development of the EU, in the German government’s view.

What the future of the EU will actually look like after Brexit will be addressed, at the latest, after the upcoming election in Germany (in September).

Merkel has already indicated that she favours the multi-speed EU option. If this scenario is pursued, it could mean that the eurozone countries band together more closely in the future.

At a summit of the ‘big four’ of France, Germany, Italy and Spain on Monday (6 March) the four biggest European economies backed a differentiated model of EU integration.

'Big four' call for new European dynamic, multi-speed EU

Ahead of the EU’s 60th anniversary Rome summit on 25 March, the heads of continental Europe’s biggest economies endorsed the vision of a multi-speed Europe, in which some members could deepen their integration faster than others. EURACTIV France reports.

But German Green MEP Sven Giegold fears that expanding the ESM into a European monetary fund would bypass the European Parliament and the Commission.

Giegold also warned that Berlin is “undermining the EU institutions” at the European Council and criticised former Parliament President and Merkel’s main rival Martin Schulz (SPD) for remaining silent on the issue.

But German government officials believe that setting up the ‘EMF’ would provide an instrument that could alleviate future turbulence in the eurozone. After Greece’s current aid programme ends, there are fears that the embattled country will need a fourth bailout package, probably without the involvement of the IMF.

Monti: Germany and France caused the economic crisis

The economic crisis in the EU was caused by the two “most revered parents” of the euro, Germany and France, which in 2003 did not comply with the stability pact, Mario Monti said today (3 March).