PARIS (Reuters) - The German head of the European Stability Mechanism, Klaus Regling, said on Wednesday there was no need for full fiscal union in the European Union or any new mechanism that leads to additional transfers between member states.
In a speech to Sciences Po university in Paris, Regling said there were already significant transfers from rich countries to poor countries and while budget funds to promote convergence could be improved, there was no need for a new instrument.
“We also don’t need a large additional budget to counter deep symmetric crises,” he said, in comments that may be seen as dampening down French President Emmanuel Macron’s ideas for a sizeable euro zone budget.
But Regling said a limited euro area budget was under discussion and could be helpful in countering asymmetric economic shocks.
“A country hit by an asymmetric shock would receive money during a crisis, but would need to repay it once it recovers,” he said. “The fund would therefore not lead to permanent transfers or debt mutualization.”
Regling did, however, support the idea of a permanent president of the Eurogroup and said the holder of the office could become a euro area finance minister “once his or her competencies have been clearly defined”.
Reporting by Leigh Thomas; Writing by Luke Baker; Editing by Ingrid Melander