Eurozone finance ministers meet to agree final proposals for single currency reform
Eurozone finance ministers gather in Brussels today to discuss a reform deal.
French President Emmanuel Macron and German Chancellor Angela Merkel met in Berlin on November 18 to reach a consensus on a number of reforms. Germany’s finance minister, Olaf Scholz, expects the European Stability Mechanism (ESM), the eurozone’s bailout fund, to be strengthened, allowing the ESM to lend up to 55 billion euros to banks during economic crises. This reform will bolster the eurozone’s resiliency, but falls short of the European Monetary Fund that was originally envisioned.
There is not enough support in the bloc to create a banking union, especially as Germany has rejected deposit insurance reforms. Critics of a European banking union are wary of insuring faltering banks in countries like Italy, which has rejected austerity measures despite its ballooning debts. The largest proposed reform is the creation of a eurozone budget, which Paris and Berlin claim would help stabilise the bloc. This plan likely remains years away from implementation, given disagreements over the budget’s size and the new taxes that would fund it. Even if a preliminary budget agreement is reached today, expectations of transformative eurozone reforms should be tempered.
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