Completing the Euro: A road map towards fiscal union in Europe

This report is the result of the work of the “Tommaso Padoa-Schioppa group”, established by Notre Europe in honour of his former President to reflect on the future of the Economic and Monetary Union.

After a thorough analysis of the roots of the crisis, the report identifies the major challenges the euro area will have to solve in the coming decade. It proposes notably:

• Completing and fostering the single market in order to allow the real exchange rate channel to work more effectively;
• Rebalancing fiscal rights and fiscal duties in the common currency area, in particular through the creation of a European Debt Agency which would serve as normal financing instrument for an amount of 10% of GDP to all countries but would also ensure adequately priced access to sovereign financing in crisis times;
• Creating an automatic cyclical stabilisation fund outside the EU budget, to alleviate the effects of endogenously-generated EMU cyclical divergences;
• Creating a banking union, composed by a euro area banking supervision authority with micro-prudential powers and a euro area agency inspired by the US Federal Deposit Insurance Corporation (FDIC), combining the function of a banking resolution agency and a deposit guarantee scheme.