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‘A French-German Vision on Euro Area Reform’ presented in an online seminar

The latest online seminar by the Florence School of Banking and Finance, held on the 15th of February, was centered on a proposal for reforming the euro area produced by 14 authoritative French and German economists.

Published in early 2018 as a CEPR Policy Insight document, the proposal aims to overcome the political deadlock which is impeding much needed structural changes, by bridging German demands for more discipline and France’s insistence on more risk-sharing. The paper calls for an overhaul of euro area fiscal rules, which they call “complex and unreliable”, the creation of an independent fiscal watchdog, and a synthetic euro area “safe asset” that offers investors an alternative to sovereign bonds.

The seminar featured as speakers three of the document’s authors. The first speaker to take the floor was Jeromin Zettelmeyer, from the Washington-based Peterson Institute for International Economics, who delivered a thorough presentation of the document’s rationale and its main features. Following his remarks, two other speakers took turns in highlighting the important points of the document and in answering questions from the public: Jean Pisani-Ferry, from the EUI (where he holds the Tommaso Padoa-Schioppa Chair in European Economic and Monetary Integration), Bruegel and Hertie School of Governance and Sciences Po, and Henrik Enderlein from the EUI (where he is a visiting fellow at the Robert Schuman Centre for Advanced Studies), Hertie School of Governance and Jacques Delors Institute Berlin.

In his presentation, Dr. Zettelmeyer highlighted the rationale behind the document and what the proposals outlined in it are trying to achieve, before looking at the concrete six-points proposals for reforms. Participants, asked in real-time whether they thought the proposal is too focused on risk-sharing or on marked discipline, mostly responded by saying it is a package balanced between the two (52%), and recommended using the proposal as a starting point for a political discussion (90% of the respondents).

Asked about the perceived importance of the individual elements in the package, respondents reacted by voting the most important element being debt restructuring as potential part of an ESM programme (44%), followed by fiscal capacity for large economic shocks (22%) and sovereign concentration charges (19%).

Download the slides of the presentation