Merkel Calls for Loss of Sovereign Powers to Save EUR

At the European Parliament German Chancellor Angela Merkel has proposed what many knew was coming. A call for a unified Europe that would mean the loss of certain sovereign powers. This was heavily hinted on the last meeting, but now Merkel is asking for an agreement as early as next month.

Angela Merkel has called for the surrender of key national powers over tax-and-spend policies to Brussels by the 17 countries in the eurozone within three years in order to rescue and shore up the embattled single currency.

In a rare landmark policy speech on Wednesday to the European parliament in Brussels, the German chancellor voiced Berlin’s absolute determination to stand by the euro and to strengthen the EU through greater integration of policymaking. But her commitment came with a price tag that many others in the eurozone may find hard to swallow.

Merkel called for a major centralisation in Brussels of sovereign national powers in sensitive areas of fiscal, budgetary and economic policies, arguing that action already taken during three years of euro crisis had only left the job half-done. “Stronger economic policy co-ordination will also perhaps be needed in areas that affect the core of national sovereignty. I’m thinking of sensitive policy areas such as labour market and tax policy,” the chancellor said. “We need solutions creating a sensible balance between the necessary new intervention rights at the European level and the scope for action of the member states and their parliaments. The European institutions must be strengthened to allow them to correct mistakes and breaches of the rules effectively.”

The concept of making the ECB the supra national financial regulator was also mentioned despite earlier comments from England, France, Italy and Spain.

via Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza