Within the European Union, it is often the smallest countries and their leaders who have the most ambition. It’s not for nothing that EU presidents tend to come from places like Portugal or Luxembourg. So it was Friday when Belgian Prime Minister Yves Leterme advocated the creation of a joint EU finance ministry. As a currency union without a common economic policy, the 16-nation euro zone is vulnerable to the fortunes of its weakest link. That’s currently Greece, which is at risk of defaulting after decades of profligacy, punishing the euro on currency markets.
Therefore, argued Mr. Leterme in an article published in Financial Times Deutschland, it would make sense to set up a “common finance ministry or a European debt agency for the euro zone.” The EDA, he said, would be responsible for the issue and administration of government debt in the euro zone, and would rank below national financial ministries.
According to Mr. Leterme’s idea, EU nations would continue to price national bonds depending on their credit ratings. However, countries could also issue common debt. The funds would be pooled and the debt would be guaranteed by all the euro-zone countries.
Mr. Leterme’s plan, however, is unlikely to come true. France and Germany only agreed to support a bailout of Greece after the euro started tanking. But it wouldn’t be the EU without the Belgian prime minister dreaming of more economy unity and new continental agencies.