Completing Economic and Monetary Union 3: Fiscal Union

The EU wants to strengthen "economic policy coordination, convergence and solidarity" in the eurozone. It therefore proposes the creation of four Unions: an Economic Union, a Financial Union, a Fiscal Union and a Political Union. This cepPolicyBrief deals with the Fiscal Union which involves the establishment of a European Fiscal Board and the creation of a "macroeconomic stabilisation function".


In cep's view, coordinating national fiscal policies by way of a fiscal "stance" for the eurozone will not achieve its aim because the economies of the individual eurozone countries are not sufficiently integrated with one another. A "macroeconomic stabilisation function" for the eurozone will reduce the incentives for the eurozone countries to maintain a sufficient buffer for absorbing severe shocks.