German proposals for strengthening Euro currency union

AP reports that Germany’s finance minister is urging bolder steps to strengthen the 19-country euro currency union by setting up a fund to help member states with high unemployment and by laying the foundations for a European Union-wide tax system.

Finance Minister Olaf Scholz made his proposals in an interview with Der Spiegel published on Saturday. The ideas take a step toward those of France’s President Emmanuel Macron, who has called for wide-ranging actions to strengthen the EU, and surpass more modest proposals from German Chancellor Angela Merkel.

Scholz advocated a eurozone “reinsurance” fund that would loan money to countries that are hit by an economic crisis and have higher jobless benefit costs. He also called for a tax on financial transactions as the beginning of an EU-wide system of tax collection.

The eurozone’s 2010-2012 debt crisis exposed a weakness in the currency union — the lack of a central pot of money to even out recessions when individual countries run into trouble. Both of Scholz’s proposals address the issue.

A eurozone-level fund to supplement national jobless insurance programs would help keep recessions and the resulting unemployment from sinking a troubled country’s finances. After a recession is over, the country could repay the fund.

The tax on financial transactions would fund collective European Union projects such as investment in transportation infrastructure and digitalization. Scholz said it could bring in 5 to 7 billion euros ($5.6 billion to $8.2 billion) per year.

Scholz was careful to say that his suggestions did not mean Germany was committing to share the debts or other financial obligations of fellow EU member states — a highly unpopular idea in the country with the eurozone’s biggest economy.

However, he said that “if we don’t just want to spout empty words about European sovereignty, then we need to draw the necessary consequences.”