THE 27 HEADS of government of the European Union member states are reportedly to be presented with a document outlining the need for a more integrated budget policy in order to safeguard the future of the euro.
Reuters says a 10-15 page document set to be presented to the European Council in Brussels this Thursday will discuss budget integration as one of the ‘four pillars’ of action needed to ensure the survival of the single currency.
The document – being prepared by senior EU figures including Jose Manuel Barroso, Herman van Rompuy, Mario Draghi and Jean-Claude Juncker – outlines the proposals alongside plans for an EU-wide banking union in order to stop individual countries from shouldering too high a burden if their banking sectors begin to falter.
Among the options it raises is an “immediate and permanent mutualisation” of debt between Eurozone members, which could either result in the issue of mutually-guaranteed Eurobonds, or the direct use of ESM funding to recapitalise any ailing banks.
It further outlines steps needed for deeper economic integration, and also discusses – in what appears to be a first – the question of how the Eurozone can retain “democratic legitimacy” if it requires countries to hand over large amounts of their financial sovereignty.
Reuters said that though some of the document’s proposals are far-reaching, it points out that everything contained within it can be achieved within the realms of existing EU treaties and could therefore be implemented relatively quickly.
Any of the plans could still require at least several months, however, raising the possibility that the summit could end without any immediate actions to safeguard the euro area – a possibility which could prompt the ECB to take more affirmative action.
The central bank’s last monthly meeting opted against cutting the main interest rate, apparently hoping to spur political leaders into taking action themselves – but also hinted that a 0.25 per cent cut could come at its next meeting, in Frankfurt on July 5.
The European Council summit begins in Brussels on Thursday afternoon and continues until Friday lunchtime.
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