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Answering the question of whether German Chancellor Angela Merkel should support French President Emmanuel Macron in his bid to introduce a position of a single financial minister of the euro area and the overall budget, head of the European Stability Mechanism (ESM) Klaus Regling told German weekly newspaper Handelsblatt that he is not going to lecture Merkel.
"But I think that we in the euro area need a limited fiscal capacity to support individual member states in case of a sudden crisis", Regling said.
Such reserve fund for unforeseen circumstances should be equivalent to approximately 1-2% of the euro area's gross domestic product (GDP), Regling added. This will amount to approximately 100 billion to 200 billion euros ($ 115-229 billion).
The European Commission also suggested that the euro area may have to issue joint debt obligations and introduce a joint budget amid fresh ideas for deeper European integration around the single currency after the UK finally leaves the EU in 2019.
Regling said that introduction of such European safe bonds or creation of safe assets will be a fundamental step forward.
"Thus, we will get a European market, which will be as deep and liquid as the US government bond market," Regling said. "But it will work only if we partially combine state debt in the euro area, and I do not see a realistic opportunity in the foreseeable future for this", he added.
Regling supported proposal of German Finance Minister Wolfgang Schaeuble that the International Monetary Fund (IMF) should not participate in any financial assistance in the euro area in the future, and also stated that the European Central Bank (ECB) is no longer required.
Turning to Greece, Regling said that Athens will no longer need loans from the ESM, after the third financial assistance program ends in mid-2018, if the country adheres to concerted reform measures.
Regling's comments followed new intentions of Emmanuel Macron, who said that the EU remains an unfinished project and is required to amend the Union's contracts, which will lead to greater convergence among the member states of the eurozone.
source: reuters.com
"But I think that we in the euro area need a limited fiscal capacity to support individual member states in case of a sudden crisis", Regling said.
Such reserve fund for unforeseen circumstances should be equivalent to approximately 1-2% of the euro area's gross domestic product (GDP), Regling added. This will amount to approximately 100 billion to 200 billion euros ($ 115-229 billion).
The European Commission also suggested that the euro area may have to issue joint debt obligations and introduce a joint budget amid fresh ideas for deeper European integration around the single currency after the UK finally leaves the EU in 2019.
Regling said that introduction of such European safe bonds or creation of safe assets will be a fundamental step forward.
"Thus, we will get a European market, which will be as deep and liquid as the US government bond market," Regling said. "But it will work only if we partially combine state debt in the euro area, and I do not see a realistic opportunity in the foreseeable future for this", he added.
Regling supported proposal of German Finance Minister Wolfgang Schaeuble that the International Monetary Fund (IMF) should not participate in any financial assistance in the euro area in the future, and also stated that the European Central Bank (ECB) is no longer required.
Turning to Greece, Regling said that Athens will no longer need loans from the ESM, after the third financial assistance program ends in mid-2018, if the country adheres to concerted reform measures.
Regling's comments followed new intentions of Emmanuel Macron, who said that the EU remains an unfinished project and is required to amend the Union's contracts, which will lead to greater convergence among the member states of the eurozone.
source: reuters.com
