Euro zone finance ministers to discuss banking union, common budget

Euro Zone, Inflation

Euro zone finance ministers will discuss next week completion of the banking union, ideas for setting up a common budget and ways to simplify the bloc’s fiscal rules, in preparation for a December summit on reforming the currency area.

No conclusions are likely to be reached at the Eurogroup meeting on Monday, however, as there are widely differing views among the 19 countries that share the euro on most aspects of reform.

“It will be more laying out the table before cooking starts,” one senior euro zone official said.

The December 15 euro zone summit will start six months of deliberations on deeper integration, with a further summit in June 2018 taking decisions on how the single currency area will look in future.

Among the possible changes are ideas for a special pool of money for euro zone countries that would be managed by a finance minister for the whole of the euro zone and who would answer to a euro zone caucus in the European Parliament.

Other proposals include turning the euro zone bailout fund into a European Monetary Fund and creating a sovereign insolvency mechanism that would put market pressure on governments to conduct prudent fiscal policies.

Some euro zone officials believe the involvement of markets is necessary because EU fiscal rules — the Stability and Growth Pact — have become so complex and prone to political interpretation that they are no longer effective.

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