Full text: Repair the roof when the sun is shining (171)

iAGS 2018 - independent Annual Growth Survey 6th Report 
Regarding reforms in specific policy areas, the iAGS recommends: the 
adoption of a Eurozone budget under the responsibility of a Minister of 
Finance for the Eurozone. The primary objective of the budget would be to 
fund European public goods and give the necessary impetus for a long-term 
growth process in the Eurozone. Meanwhile, the application of a golden rule of 
public finance at the domestic level would incentivize public investment in the 
Member States. 
iAGS recommends the pursuit of ECB's unconventional monetary policies 
and modifications in their implementation. Rather than applying its capital 
key to allocate the domestic purchases of assets, hence at the benefit of the 
largest countries in the Eurozone, the ECB could target countries with lower 
growth than the Eurozone average and allocate its purchases to these countries 
(e.g. Italy) hence implementing some fine-tuning. 
On banking union, a strengthening of the third pillar of the Banking Union-i.e. 
a common deposit insurance-should be implemented but should be preceded 
by successful structural reform of the entire financial sector. Securitisation under 
capital markets union raises stability risks. Instead it is necessary to regulate the 
shadow banking system and to introduce a financial transaction tax to decrease 
speculative activities 
Achieving policy coordination and upward convergence is no easy task 
given political realities. If agreement cannot be reached on ambitious risk 
sharing mechanisms, which would imply constraints on national policy­
making, an intensification of softer forms of coordination may be the only 
way forward. One way to do this would be to seek greater commitment to the 
Broad Economic Policy Guidelines by strengthening supporting institutions. 
Macroeconomic policy convergence boards (modelled on the EU level Fiscal 
Board and the national level Productivity Boards) and extensions of the existing 
EU Macroeconomic Dialogue to both the Euro Area and the national level could 
be established; their focus should be the interaction between monetary, fiscal 
and "incomes" (i.e. nominal wage and profit developments) policies, rather 
than narrow fiscal issues. The goal is to ensure that the "ownership" of national 
actors for the country-specific macroeconomic policy needs identified in this 
inclusive and consultative process is substantially greater than at present, while 
improving consistency across countries. Recommendations feed into the BEPGs 
which are, in principle at least, a hard form of coordination and where the EU 
Commission and the Council play their role, as per the existing rules •
        

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