The Eiffel Group: A political community to rebuild the architecture of the euro

The recent crisis has highlighted some problems in the current structure of the Eurozone, such as the lack of political integration. This column introduces the Eiffel group – a group of French experts – and its call for a ‘political community of the euro’. The economic and political rationales behind the proposal are discussed in detail. This proposal (also shared by experts in other countries) calls for a debate about the architecture and institutions underpinning the European Monetary Union.

The idea that the European Monetary Union can only exist with some form of political integration and a proper budget is not new. In 1977, the MacDougall report suggested that a budget of the order of 5-7% of GDP was necessary, and in the run-up of the Maastricht treaty, Jacques Delors was insistent on the needs for political integration (see, e.g., Delors 1991). Yet, for lack of political consensus, it was decided to proceed with monetary union alone in the hope that monetary and financial integration would eventually precipitate both fiscal and political integration over time. The dominant view (Emerson report 1990) was to consider monetary unification as a key, technical complement to the single market that by eliminating transaction costs and foreign exchange risks would foster macroeconomic convergence. As for the macroeconomic costs of losing an adjustment device at the country level, it was generally believed that such loss would be benign because:

Σχετικές αναρτήσεις:

• Greene, M. (2014) “The Eurozone’s Imperfect Banking Union”, Open Markets, 20 Φεβρουαρίου.
• Dullien, S. & Torreblanca Ignacio, J. (2012) “What is Political Union?“, The European Council on Foreign Relations.
• Merler, S., (2013), “Is there a path to political union?”, Bruegel, 23 Σεπτεμβρίου.