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Analysis: building a closer fiscal union

Euro coins © EU


Francesco Nicoli from the European Policy Centre think tank analyses current reforms and future steps to strengthen European Monetary Union.

Nicoli says that some degree of fiscal integration is necessary to overcome structural problems of the euro area.

“Any form of fiscal union must accomplish, regardless of its institutional shape, two basic functions: preventing the emergence of endogenous asymmetric crises, and correcting acute economic and fiscal crises,” he says.

Further corrective mechanisms are needed, he says, and the creation of a genuine fiscal union must be a political priority for eurozone countries.

He recommends a number of elements for closer fiscal union:

  • a strong European budget
  • a strengthened coordination mechanism of national budgets
  • a residual and fully independent national budget

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In brief

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