Why The Eurozone Needs A Treasury

5 Feb

Flash 5-2-2015 by Jörg Bibow

The-European-Central-BAnk-007The lack of fiscal union is the ultimate flaw in the current euro regime and at the heart of the unresolved euro crisis. The euro has decoupled the monetary and fiscal authorities, a divorce that has left all parties concerned extremely vulnerable. Lacking a central bank partner, the national treasuries are subject to default.

Lacking a Euro Treasury partner and Euro Treasury debt, the ECB is subject to legal challenges of its quasi-fiscal policies as applied to national debts. Today, there is little the ECB can safely buy without opening the can of worms that has the transfer union label on it. The Euro Treasury would establish the vital treasury-central bank axis of power. The original euro experiment has failed. It is high time to re-launch the euro on a sounder footing.

(from Jörg Bibow, “Why The Eurozone Needs A Treasury”, Social Europe Journal, 10/11/2014)

 

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