A European Monetary Fund (EMF) should be established to have greater responsibility for the development and monitoring of financial assistance programmes to member states, a group of countries including Ireland has said.
The grouping suggested a strengthened framework for “orderly sovereign debt restructuring” in the event of unsustainable debt levels should be explored as part of the establishment of the EMF.
The endorsement comes following a proposal from the European Commission last September which formed part of ambitious plans to overhaul the institutions of the euro area.
In a paper published by Ireland, Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands and Sweden, finance ministers set out shared views to create a stronger economic and monetary union (EMU). Aside from endorsing an EMF, the ministers said they were committed to the process of completing the banking union, and strengthening the European Stability Mechanism (ESM), an emergency funding programme.
The eight finance ministers wrote that “it is of the essence that we do our utmost to strengthen economic and financial stability and regain public trust” in the aftermath of the financial crisis and subsequent sovereign debt crisis.
“For that reason the discussion on the deepening of the EMU should find a consensus on ‘need to haves’, instead of focusing on ‘nice to haves’,” they said.
Deposit insurance
This letter follows discussions that began last December on the future of the economic and monetary union. That discussion was prompted by a note from European Council president Donald Tusk which advanced ideas including the completion of the banking union and the gradual introduction of a European deposit insurance scheme.
Minister for Finance Paschal Donohoe said publication of this initiative was an important step that set out common values with like-minded countries aiming to help build a stronger EMU.
“A stronger EMU will create the conditions within which open economies can trade for the benefit of their citizens. These values show a shared approach to fostering such a union,” Mr Donohoe said.
The group also advocated full compliance at member state level with the stability and growth pact, focus on initiatives with public support in member states and the fostering of sustainable growth.
In June, European leaders will aim to make a first set of decisions on completion of EMU.
