Reforming the Eurozone without a ‘Grand Bargain’: New Instruments and Power-Sharing in Incomplete Monetary Union

Abstract:

Emmanuel Macron’s success in the French presidential elections in May 2017 has given fresh impetus to the debate on reforms in the eurozone. However, since there is no consensus on fiscal or political integration, the reforms will be limited.

Long-discussed ideas, such as extending the tasks of the European Stability Mechanism (ESM), a finance minister for the eurozone or the creation of new stabilization instruments within the European Union’s Multiannual Financial Framework (MFF), will probably dominate the agenda.

In addition, negotiations to find a successor for Mario Draghi, President of the European Central Bank (ECB), will be conducted over the next two years. Although the main elements of the new EU reform package will be brokered between France and Germany, both countries must take account of the specific challenges faced by Italy.