"Will Germany save the euro?"
Research Fellow, CIDOB
12 June 2012 / Opinión CIDOB, n.º 150 / E-ISSN 2014-0843
In the 11 th hour before the European Union’s feared fall into the precipice, the German government has come forward with ambitious plans for more fiscal integration among the EU member states. The German proposals come as the Spanish banking crisis is threatening to bring down the Eurozone and spread contagion worldwide. The French and, in particular, Greek parliamentary elections and government formation are expected to bring even more uncertainty.
The German Chancellor has spoken out for the creation of a European supervisory banking authority, and of a banking union. Merkel, however, remains fiercely opposed to a “bail-out light” of the Spanish banks, the option requested by the Spanish Prime Minister. The German government is set to advocate more political integration on the European level – a “fiscal union” that would entail a more common budget policy, increased powers for the European institutions, and possibly also the creation of a “Ministry of Financial Affairs” for the Eurozone. The German Chancellor’s plan would foresee a “two-speed” Europe in these matters, allowing the more ambitious countries to move ahead without waiting for those not yet ready follow the path. Although the exact contents of the proposal remain to be defined, media outlets report that she does apparently not want to stop at fiscal planning but wants to also push for a common European approach to labour market reforms, tax policies, and social security systems. (...)