Europe’s desire for a new institution that can keep an eye on government finances and rescue programs might be gaining momentum — if political leaders can only come up with a better name.
The term “European Monetary Fund” has become so entrenched that it was included in European Commission President Jean-Claude Juncker’s State of the Union address last week, when he said he’d make concrete proposals for the body by December. The problem is that the region’s biggest user of the word “monetary” isn’t satisfied.
European Central Bank President Mario Draghi suggested that an alternative name might be in order when he met with the region’s finance ministers in Tallinn on Friday, according to people familiar with the matter. His concern is that the label risks causing confusion with the institution he heads, which sets monetary policy for the 19-nation euro area.
German Finance Minister Wolfgang Schaeuble alluded to the objection in a press conference in the Estonian capital the next day, even as he reiterated his own support for the idea.
“One or the other of the central bankers has pointed out that the term monetary fund can lead to misunderstandings because this is monetary policy and is the remit of central banks, which is completely undisputed,” he said. “But beyond this reservation against the wording, we have much support in the matter.”
The disagreement isn’t on the substance and isn’t serious enough to derail plans, with a solution likely to be found further down the line, the people said, asking not to be named because the finance ministers’ meetings are private. An ECB spokesman declined to comment.
Whatever the body is eventually called, whenever it is created, the idea is to upgrade the Luxembourg-based European Stability Mechanism — the euro-area bailout fund — to allow it to monitor the finances of countries that are in trouble and oversee future bailouts.
The talks could be complicated, as the move would involve taking some powers away from the Brussels-based Commission, which is currently responsible for fiscal surveillance, and handing them to the fund’s board of governors — euro-area finance ministers themselves.