Wolff at the Door

by Andrew Stuttaford

Reuters has a report on a speech by Guntram Wolff, the head of euro-enthusiastic think tank Bruegel today. He thinks that the euro zone should move towards fiscal union, including a “small” treasury:

Such a treasury, financed from taxes on industry and euro zone citizens, would be sufficiently large even at 1 percent of euro zone GDP – roughly 90-100 billion euros, Wolff said. Such annual revenue would allow the treasury to borrow up to 3 trillion euros on the market, if necessary, making it a powerful public backstop. “If you then have a systemic banking crisis and everybody thinks all the big banks in Europe will fall apart, you have (the treasury) saying ‘we guarantee the deposits if necessary’ and everyone will believe it because it can go to the market and borrow 3000 billion,” Wolff said.

Given the unlovable logic of Europe’s monetary union, that’s a far from stupid suggestion, but Wolff recognizes that this is something that the voters just do not want for now.

“I don’t see much movement this year and next year,” Wolff said. “It could come when the crisis flares up again. We need another crisis for that.”

Ah yes, the beneficial crisis, again.

And then there was this:

The rising popularity of eurosceptic parties in the wake of the economic crisis should be interpreted by policymakers as an additional incentive for further integration, Wolff said.

Yes, you read that right.

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