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German Finance Minister Calls for EU Fiscal Centralization

© REUTERS / Fabrizio BenschGerman Finance Minister Wolfgang Schaeuble
German Finance Minister Wolfgang Schaeuble - Sputnik International
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German FM says Eurozone must centralize its fiscal policy towards member states’ budgets.

MOSCOW, November 24 (Sputnik) — Head of German Finance Ministry Wolfgang Schaeuble spoke out Sunday in favour of authorizing the EU to have a veto power over member states’ budgets that violate eurozone’s fiscal targets after France has failed to curb its budget deficit.

European Commissioner for Jobs, Growth, Investment and Competitiveness Jyrki Katainen (L) and European Commissioner for Economic and Financial Affairs Pierre Moscovici present the EU executive's autumn economic forecasts during a news conference at the EU Commission headquarters in Brussels November 4, 2014 - Sputnik International
France's Budget Deficit to Reach 4.7% in 2016: EU Commission
Paris once again missed the 3% EU target on member states’ budget deficits for 2015 and has become the focal point of discussions during the meeting of EU commissioners during past weekend. Albeit the meeting ended without a clear decision to possibly sanction France for its lack of fiscal discipline, the German FM commented on the situation, calling for more centralization of the EU authority. He suggested that the EU economic and monetary affairs commissioner, a post held by a Frenchman Pierre Moscovici though, "should get the right to veto budgets that violate the euro stability criteria".

In his opinion, the eurozone needs more unity in order to enhance its fiscal performance. At the same time, such a move would not violate fiscal legislation of member states as national legislatures have the ultimate say on budget’s income and spending.

"This does not violate national budget laws. The parliaments of the member states concerned can still decide whether to cut spending, increase taxes or introduce other pro-growth reforms," he said as quoted by the Daily Star. "We need to show that we want to jointly proceed toward a fiscal union," he stressed.

ECB chief raises prospect of buying government bonds in an effort to stimulate the Eurozone. - Sputnik International
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The commentary comes ahead of the ECB policy meeting in early December, a landmark event for international investors as it will outline the prospects of growth in the Eurozone. Schaeuble pointed out that the EU might need to undertake additional confidence-enhancing measures in order to secure a better economic outlook and prospects of the euro.

"That means that the eurozone states commit themselves to reducing debt. It must be clear that we want to anchor the euro irrevocably, permanently. We have achieved this with the banking union but not yet with the fiscal union," German FM said.

The EU executive body must, within a week (until 30 November), publish its opinions on the budgets of all 18 eurozone member states. France’s 2015 budget is the most frustrating for a major economy, as its deficit reaches 4.3% GDP and the nation can only meet the EU deficit criteria by 2017, according to French FM Michel Sapin. German commissioner Guenther Oettinger has already dubbed France a "deficit recidivist", insisting the nation has to implement comprehensive reforms.

On his part. German FM Schaeuble stressed that only a supranational body can effectively manage the risks to stability of the euro.

"I would prefer that a European institution enforce the rules," he said. It will not be easy to amend the EU Treaty though as it requires a positive vote of all 29 member states, he admitted.

"But we should at least equip the economic and monetary affairs commissioner with the same rights as our competition commissioner," Schaeuble said.

The euro is depreciating ahead of an ECB decision on monetary easing, having nearly touched a two-year low against the dollar today. - Sputnik International
Euro Nears Two-Year Low on ECB Easing Promise
France is the main driving force behind the looming ECB stimulus, as its economic model, based on outdated heavy industry and inefficient and generously subsidized agriculture, requires milder, looser monetary conditions, which would inevitably cause a depreciation of the euro. Germany is firmly opposed to ECB easing as its economy works like clockwork. However, France’s stances on monetary and fiscal issues find a broader support among the Eurozone member states.

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