Are We About to See a ‘European Monetary Fund?’

There’s an air of furtive desperation about the proceedings.
As debates rage in Europe over whether or not to take a two-speed or multi-speed approach to post-Brexit integration, Germany rekindled interest in the creation of a European Monetary Fund.
Chancellor Angela Merkel and Finance Minister Wolfgang Schuble both want to upgrade the grossly unaccountable Luxembourg-based European Stability Mechanism (ESM) into an IMF-style rescue fund that will ‘be granted the authority to monitor the finances of all eurozone countries,’ reports Der Tagesspiegel.
EU Monetary Commissioner (and former French finance minister) Pierre Moscovici is against it, for a simple reason: monitoring budgetary policy in the euro area is, for the moment, the responsibility of the EU Commission.
This is not the first time the idea of a European Monetary Fund has been explored. Ever since the Eurozone’s sovereign debt crisis threatened to rip Europe’s fragile union apart, rumors have periodically surfaced about the possible creation of a fund capable of taking over the IMF’s role as a major source of emergency funding. In 2010 The Economist magazine organized a roundtable debate on the issue, with Daniel Gros, of the Centre for European Policy Studies and Thomas Mayer, then chief economist of Deutsche Bank, both singing its praises:

This post was published at Wolf Street on Mar 9, 2017.