The eurozone must identify its problems, then see what changes to its institutions are needed to fix them, euro zone finance ministers said today during informal talks on the future of the single-currency area.
The discussions in the Estonian capital of Tallinn follow differing proposals from France, Germany and the European Commission to revamp the institutions of the 19-country eurozone after Britain leaves the European Union in March 2019.
The proposals include creating a pan-EU or eurozone finance minister, setting up a separate eurozone budget or reserving a part of the existing EU budget for the currency union, and setting up a eurozone parliament alongside or within the existing EU parliament of all 28 EU members.
Instead of having a debate mainly about the institutional side, (we should have) a debate about what is lacking in the economic and monetary union, in terms of resilience, competitiveness, solidarity
"I think we should start from the other end," Jeroen Dijsselbloem, the chairman of eurozone finance ministers, said.
"Instead of having a debate mainly about the institutional side, (we should have) a debate about what is lacking in the economic and monetary union, in terms of resilience, competitiveness, solidarity," he said.
"So I think we should start from what the problem is and end with an institutional debate," Dijsselbloem said.
The European Commission on Wednesday backed the idea of a pan-European finance minister in charge of all forms of EU or eurozone financing via the EU budget, not just for the eurozone.
In the Commission's view, the pan-European minister should also preside over the eurozone bailout fund ESM, which is now a separate institution set up by eurozone governments. The ESM itself would be transformed into a European Monetary Fund.
The Commission does not want a special eurozone parliament, however, stressing the need for unity among the 27 countries that will remain in the EU after Britain leaves. It called for the countries still outside the euro zone to join quickly.
France has a different view, however. It wants a large, separate euro zone budget financed from taxes, a finance minister specifically for the euro zone and a separate euro zone parliament to which the minister would be accountable.
Nor is there agreement on whether all the changes to the eurozone should be done through a separate treaty between governments, or by changing the European Union treaty.
The difference is more than just a technicality, because an intergovernmental treaty would be faster, involve only eurozone governments and leave all powers with these governments.
A budget for the single currency area would help counter external shocks which hit just one or a few euro countries, rather than the whole bloc
Changes through the EU treaty would require more time and mean non-eurozone countries and the European Parliament would have to agree, too. The powers of the new eurozone institutions would be shared with EU institutions, which are sometimes mistrusted by some national governments.
Eurozone ministers agree that a budget for the single currency area would help counter external shocks which hit just one or a few euro countries, rather than the whole bloc, when all governments can simply increase budget deficits.
But there is no agreement on its size, how it should be financed or what it should be spent on.
Macron has mentioned such a budget could be several hundred billion euros. The head of the ESM bailout fund, Klaus Regling, suggested a figure of 1-2 percent of eurozone gross national product, which would mean €100-200 billion.
The gap with the expectations of Germany seems to be large because Berlin has signaled it was thinking about a budget in billions of euros, but in single digits.