THE EUROPEAN FISCAL UNION. A SOLUTION TO SAVE THE EURO?

Abstract

A monetary union with strong connections among banking systems but without a fiscal union may pose problems because the national governments may be tempted to increase inneficiently their public debts, which, in case of contagion, may have serious repercussions on other economies. One of the most widespread ideas among the political decision makers as well as among specialists is that in order to overcome the sovereign debts crisis, the Euro Area needs a fiscal integration which should double the monetary one. This article analyses the idea of fiscal integration in the Euro Area as a solution to overcome the sovereign debt crisis and save the euro. The situation has become critical for countries such as Greece, Portugal, Ireland, Spain. It will present as well the implications of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union signed on the 2nd of March 2012 by 25 EU member states.

Keywords

• fiscal union, governmental deficit, public debt, treaty.