Discussions have started on a type of ‘rainy day’ fund that could help the euro zone address shocks such as the Greek debt crisis in the future, the head of euro zone rescue fund the European Stability Mechanism (ESM) said.
ESM chief Klaus Regling said, in comments made at London’s Chatham House think tank on Tuesday and published on Wednesday, that a mechanism to counter “asymmetric shocks” was “an important gap in the euro area’s fiscal tools.”
“A discussion about a limited fiscal capacity that would fulfil this function has begun,” Regling said.
“The tool can be designed without debt mutualisation, and without permanent transfers between countries,” he added.
“In this context we could look at examples that exist in the U.S., for instance rainy day funds, or a complementary unemployment scheme.”
Figures of around 100 billion-200 billion euros (£90.27 billion – £180.55 billion) have been suggested privately by euro zone officials as a starting size for any such fund.
In the longer run Regling said the euro zone could also develop a “European safe asset”, but that “it would require some debt mutualisation.”
Debt sharing is currently not supported by the bloc’s main members such as Germany.
It “cannot happen unless there is a lot more confidence that all euro area countries comply with the rules they have agreed to,” Regling said.
Source: Reuters (Reporting by Marc Jones, Editing by Abhinav Ramnarayan)