Spain calls for revamp of euro area economic architecture
By Alexander Bueso
Date: Monday 15 May 2017
(ShareCast News) - Madrid joined France's call for "a true economic government" in the euro area, saying the recent recession had revealed a need for a well-structured plan and not just short-term solutions.
Officials in Spain said the European single currency was an unfinished project, with full 'fiscal union' still pending, according to a document to which daily El Pais had gained access.
Since the euro's birth, economists had consistently pointed out how the so-called Theory of Optimal Currency Areas requires that government spending be able to shift from one country to the next in order to avoid a single currency having sometimes large and opposing effects on the different countries which share it.
Indeed, Madrid held that the last recession had uncovered "critical" flaws in the euro's design.
However, the seven-page proposal from Madrid also called for 'convergence criteria' related to the government accounts and foreign trade which countries needed to meet.
In return, called for creating an anti-crisis budget, a common unemployment insurance system, euro bonds and completing the banking union, including the pooling of risks.
The European project could only endure if its citizens saw that it provided "sustainable and inclusive prosperity levels", the document read.
Spain also defended the need for the Eurogroup of finance ministers to be more democratically accountable.
"We cannot transfer responsibility for decisions that are very important to citizens without the democratic legitimacy to do so."
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