Central bank chiefs from France and Germany said Monday that the state of the eurozone is far from ideal and pushed for greater financial integration in the 28-member bloc.
“Eurozone integration is at the crossroads,” Bank of France Governor Francois Villeroy de Galhau and Bundesbank President Jens Weidmann wrote in a joint op-ed for the German daily Süddeutsche Zeitung.
The article appeared one day ahead of the Franco-German Ministerial Council meeting in Paris. The two central bank chiefs urged eurozone countries to transfer “sovereignty and powers to the European level,” noting that a joint finance ministry for the eurozone could be one promising way of harmonizing the bloc's fiscal policies.
The duo also proposed creating a joint treasury so as to build a less fragmented European administration and called for the formation of a stronger economic body subject to parliamentary scrutiny.
The European debt crisis had not fully been overcome yet, the two bankers noted, adding that “there was no shortage of challenges for the eurozone and the larger European Union.”
The two central bank chiefs said that the European Central Bank's (ECB) monetary policy had helped soften the blow of the global financial crisis, but it was not able to create a long-term sustainable growth in the eurozone.
Calls for a central finance ministry in Europe are not new with many policymakers having supported the move, reasoning that such a ministry could prevent financial imbalances and respond faster to financial crisis in the bloc. The idea was first floated by former ECB president Jean-Claude Trichet in 2011, who said that such an agency would impose discipline on countries that failed to keep their public finances in order and monitor economic reform.
In August last year, French Economy Minister Emmanuel Macron called for full fiscal integration in the EU and proposed that a “Euro Parliament” be formed and given control of its own budget.
Last week ECB board member Benoit Coeuré backed the idea of creating a treasury for the eurozone. "One element here will be to strengthen the euro area executive with a euro area treasury, be it within the Commission or as a separate body," he said, according to Reuters.