FX.co ★ EU to set its own finance ministry

The recent eurozone debt crisis exposed the lack of financial safety. The European Union consisting of 28 member countries with vast cultural and economic diversity needs tougher control urgently. This idea was brought up in 2010 and European leaders agreed on the European Financial Stability Facility (EFSF). This was later transformed into the European Stability Mechanism (ESM), which operates alongside the IMF in Europe’s bailout programs.

However, the European Commission believes the ESM needs to evolve. In the report under the title of Integrating the economic and monetary union, the European Commission recommends that the ESM has to be reorganized into a true European Monetary Fund (EMF) and the common eurozone’s finance ministry should be founded. Experts say these institutions aim to complete the formation of the economic and monetary union by 2025. For instance, the new finance ministry will bear responsibilities which are now shared among different agencies and institutions. With the new finance ministry, complicated decisions will be made with tighter deadlines. The European counterpart of the IMF will ensure independence from other lending institutions. The eurozone’s leaders will have to discuss in greater detail the fund’s goals, structure, and financing sources. The European Monetary Fund could be created on the concept of the European Stability Mechanism which has been widely used as a tool of crisis management in the eurozone, the European Commission report reads.