France and Germany agree on eurozone reform
Governments talk a lot about eurozone reform but can’t get their act together. So it’s time for academics to step in.
That impatience seems to be at the core of an unprecedented initiative by French and German economists, who published Wednesday a detailed plan on how to make the monetary union shock-resistant and a better guarantor of long-term prosperity.
Fourteen influential scholars,
who in September published a joint op-ed in Le Monde and the Frankfurter Allgemeine Zeitung to urge their respective governments to be bold on reforming the monetary union, have taken a step further to detail what they think should be done — and the sooner the better.
The basic idea underlining their plan — which came in the form of a “policy insight” jointly published in Paris and Berlin — is that France and Germany may well be separated by historical and cultural differences in their approach to monetary union, but both make strong arguments.
The plan is given extra weight because the German authors are more varied than the usual center-left academics traditionally sympathetic to French arguments.
In a nutshell, the eurozone needs both financial discipline — as the Germans argue — and risk-sharing — as the French insist on.
But both need to be credible, and must stop relying solely on either strict rules that can’t be enforced, or government promises that can’t be kept.
Furthermore, there is no time to waste, the economists argue, because no one knows when the next financial crisis will hit, and even though the economy is recovering at a brisk pace, the eurozone remains vulnerable.
The report seems to make a point to skirt around the terms in which the eurozone debate has been framed in the last few months, notably by French President Emmanuel Macron who has pushed for grand reforms including the creation of a eurozone finance minister who would manage a “common budget.”
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