Could a federation save the euro?

“More Europe to save the euro?” wonders French financial daily La Tribune. It launches the idea as the European Council opens a meeting in part dedicated to finding sustainable solutions to the debt crisis. “The idea is not so much to weigh in the world but rather not to be a burden for the others,” the paper notes. Furthermore, “at the height of the crisis, the idea of a federation becomes more attractive”. Several well-known figures “long-time supporters of the Eurogroup” (Jean-Claude Juncker from Luxemburg, Italy’s Giulio Tremonti or the Belgian Didier Reynders), are, for example, promoting euro-bonds. This solution implies solidarity and joint financing for part of the public debt in the eurozone. As for Jean-Claude Trichet, the paper continues, he’s “stepped out of his role as the president of the European Central Bank (ECB) and is calling for a European Finance Minister.”

But, La Tribune warns in an editorial, other than collegial economic management and thus a loss of political sovereignty, “to ensure the sustainability of a monetary zone, internal transfers must also be possible in order to redistribute surpluses in the rich countries towards countries in deficit. For the moment, the EU, with a budget of 1.2% of European GDP, not only has a problem of political legitimacy, it also lacks funding”.