European Journal of Economics and Economic Policies: Intervention

Making the euro viable: the Euro Treasury Plan*

Jörg Bibow *

Keywords: Economic and Monetary Union, euro crisis, fiscal union, public investment, Euro Treasury, European Central Bank


The euro crisis remains unresolved and the euro currency union incomplete and extraordinarily vulnerable. The euro regime's essential flaw and ultimate source of vulnerability is the decoupling of central bank and treasury institutions in the euro currency union. We propose a Euro Treasury scheme to properly fix the regime and resolve the euro crisis. The Euro Treasury Plan would establish a rudimentary fiscal union that is not a transfer union. The core idea is to create a Euro Treasury as a vehicle to pool future eurozone public investment spending and have it funded by proper eurozone treasury securities. The Euro Treasury could fulfil a number of additional purposes while operating mainly on the basis of a strict rule. The plan would also provide a much-needed fiscal boost to recovery and foster a more benign intra-area rebalancing.

Author Notes

This paper is the winning paper in the category ‘Reforming European economic governance’ presented at the Progressive Economy Annual Forum, 3 June 2015, in Brussels, Belgium. The Progressive Economy initiative was launched in 2012 by the Group of the Progressive Alliance of Socialists & Democrats in the European Parliament.

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