Publication

A key question confronts the European Union: Does the eurozone need its own budget? The pro-side argues that the United States’ monetary union works much better because there is a large federal budget to smooth the impact of asymmetric shocks. The eurozone should have its own budget to provide similarly automatic insurance to its members. This brief argues, however, that this point misreads the US experience. The euro’s long-term stability depends far more on completing plans for a European banking union than it does on creating some new budget for the eurozone.