Germany has made some moves toward convergence of euro fiscal policy -- a necessary step to save the common currency. A monetary union without a fiscal one has damaged the European economy. Germany capitulated on two key points, allowing: (1) European funds to be used to directly recapitalize banks and (2) bailout funds to be used to buy sovereign bonds on the open market.
This is a start but hardly a finish. In order to maintain the euro, Germany eventually must cede fiscal control to a pan-European authority. The moves so far have established a trend. Germany will soon be in too deep to turn back -- the necessary prerequisite to push through the politically unpopular idea of "eurobonds" backed by the full faith and credit of all euro nations -- at least those who are solvent (read: Germany).
More...
No comments:
Post a Comment