The State of the European Union. The European Parliament faces its most important elections yet

THE STATE OF THE EUROPEAN UNION 78 during 2018. These included strengthening the ESM and transforming it into a European Monetary Fund, with enhanced autonomy. This monetary fund would be the backstop for the resolution mechanism, so that it could provide funding in the event of failure of a financial in- stitution. The purpose of this function is to offer solutions to the insolvency of financial institu- tions at the European level, reducing the possi- bility of contagion of the host country or of other financial institutions. At the same time, the Commission proposed that ESM decision- making be accelerated and that the institution should play a larger role in financial assistance programmes. In addition, the post of European Minister of Finance should be created, to serve as Vice-president of the European Commission and head of the Eurogroup. The aim of bringing together a number of economic functions in a single position would be to improve both the coordination and transparency of European economic decision-taking. With these proposals, the European Com- mission was establishing a roadmap to be followed by Member states. In this way, it sought to strike a balance between those who argued for greater integration and those who set very demanding risk reduction requirements as a prerequisite for further integration. The aim was to identify the principle elements of the debate in the hope of facilitating tangible results. The importance of the roadmap lies in its attempt to replace an approach based on taking decisions on a case-by-case basis with one that establishes a broad package of measures to strengthen the whole eurozone. If these measures are to be approved, all parties will need to make significant concessions, but the hope is that mem- bers will have a greater incentive to compromise, in the knowledge that concessions they make in some areas may be offset by achieving their objec- tives in others. Setting out positions: March 2019 It was not long before the Commission’s road- map ran into trouble. In March 2018, the eco- nomics ministers of Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands and Sweden published a letter setting out their posi- tion on reform of the euro. The signatories ar- gued that, to stabilize the eurozone, it would first be necessary to take measures at the national level. In their view, such measures should be de- signed to ensure fiscal sustainability. From the perspective of these countries, fiscal consolida- tion and the consequent creation of a fiscal space would provide a cushion against a possible slow- down and thus constitute a key reform to strengthen the eurozone. Secondly, these countries took the view that monetary union should concentrate its efforts on those reforms that enjoyed broad public sup- port, rather than ones that entailed the signifi- cant transfer of competencies from individual states to the EU. These countries prefer to em- phasize those areas that have already been identified and have been the focus of European cooperation, rather than opening the debate to wider reforms that would involve new elements. In this respect, they argue for the need to com- plete banking union before starting to discuss integration in other areas, such as fiscal union. However, even in areas such as banking un- ion, the signatories impose significant limits on the scope for far-reaching reforms. In their view, before any deposit insurance scheme is intro- duced, other elements of banking union must be addressed, such as improved regulation with re- spect to non-performing loans and sovereign debt holdings. They also argued for improved insolvency procedures and criteria for interven- tion by the public sector. The upshot of all this is that any measure to share risk between countries