I am currently giving a lot of talks in Europe and the US about the Eurozone crisis, how to understand it and what kind of reforms are needed to set the currency area onto a more sustainable course. Some of these thoughts are summarised in an article recently published on this website.
There is, however, one other idea that I have been mulling over for quite some time and that I think is worth discussing. There is a lot of talk about the need to rebalance the Eurozone but very few thoughts on a sustainable system of fiscal transfers that could further stabilise the currency area. Here is what I have been thinking about that could maybe achieve this:
There is a Euro Group in the Council but none in the European Parliament. I think it is time to change this. A Euro Group in the EP – consisting of all MEPs from Eurozone countries – could run a Eurozone budget (on top of the normal EU budget) and take spending decisions with the overall macroeconomic health and strategic inetrests of the currency zone in mind. The Eurozone budget could be generated by new taxation (especially a new financial transaction tax levied across the Eurozone would be a good start). There should also be a rather short budget cycle – not the long-term framework the overall EU budget works under – which should create more political debate about investment and spending priorities and could thus make parliamentary business more interesting.
Any comments on this?