The outgoing president of the European Central Bank (ECB) has called on euro countries to commit to further integration – in what's a controversial and dividing topic among the 19 nations.
In an interview with the Financial Times over the weekend, ECB President Mario Draghi said "what matters is to make the (euro) union stronger" and "in some areas, further integration achieves that goal."
The euro zone is made up of 19 European nations that share the same currency — the euro. Their monetary policy is decided by the ECB, which is based in Frankfurt. However, their fiscal policies are decided at the national level – which often creates discrepancies and makes the region more exposed to financial shocks.
While some countries argue that they need to share more when it comes to fiscal policy, other capitals are reluctant to delegate more power to European institutions, fearing to lose control over their economies or having to finance high-indebted nations.
"To have a stronger EMU (economic and monetary union), we need a common euro zone budget. Clearly the political debate on that still has a long way to go. But I am optimistic," Draghi said, supporting a plan that the French President, Emmanuel Macron, has tried to implement.
Led by the French delegation, European finance ministers agreed to create a common euro zone budget earlier this year. However, details of how it will be financed and how big it will be have yet to be agreed upon. Nonetheless, the compromise that has been achieved between the 19 capitals is far less ambitious than the original proposal from President Macron.
Draghi has often criticized member states for not doing enough to support the euro economy. He said that monetary policy alone cannot lift the moribund growth and inflation levels seen in the region.
He told the FT that more government support "could greatly help" lower the pressure on the central bank.
Draghi ends his eight-year mandate at the ECB on October 31. Christine Lagarde will take over from Draghi on November 1.
Read the full FT story here.