An excuse for a headline — and a video.
Doubts over the feasibility of a European Monetary Fund (EMF) continue apace on Tuesday morning.
German Chancellor Angela Merkel has been warning that such a fund — something along the lines of the international (IMF) version — would require a new European treaty. Meanwhile, ECB board member Jürgen Stark has also been pouring cold water on the idea.
BNP Paribas has a good round-up of the issue:
. . . Markets and politicians are starting to understand that the idea of a European Monetary Fund (EMF) not being feasible. ECB’s Stark has pointed out that such a institution would not be covered by the Maastricht Treaty. However, the introduction of an EMF implies a loss of national sovereignty and the Lisbon II Treaty illustrated how difficult the ratification of such a treaty could be. Most importantly EMF will be a multi-year project and will be of no help to Greece or any other troubled European economy at the moment. nonetheless, the idea of EMF provides some very useful insights. With this proposal, European politicians indirectly admit that bringing in the IMF would be the best solution. The EMF would follow similar rules and procedures as the IMF, but the only reason why the IMF has not yet been considered to sort out Greece seems to be down to the loss of reputation for EMU should the IMF need to sort out Greece. In addition, there might also be a strong political intention to not provide IMF President Strauss-Kahn with a European platform.
Cue the music:
(H/T to Gary Jenkins for the title)
Related links:
Towards a European Monetary Fund – CEPS
Splits open on European fund – FT
Franco-German dynamics make EMF a distant goal – FT