Eurozone Banking Union Seen As Crucial Part Of Recovery
A spate of positive data from the eurozone confirmed that the region has turned a corner and is emerging from its longest ever recession, but a few question marks still remain.
Eurozone unemployment figures are unlikely to drop significantly in the near future as austerity programs designed to close financing gaps continue to shrink the job market. The region's disconnected banking structure is also weighing on its fragile recovery.
On Tuesday, International Monetary Fund Chief Christine Lagarde called on eurozone lawmakers to move forward with the proposed banking union that will tie all of the bloc's banks together under one unified supervisor, the European Central Bank. Reuters reported that Lagarde spoke of the urgency in getting plans underway for the banking union at a conference in Paris.
She highlighted the fact that the region's governments cannot continue to rely on the ECB's accommodative policies to stabilize the region and that the banking union would provide a sound foundation for better governance.
Although eurozone leaders have agreed to create a banking union, several members are divided over how the union will affect individual governments and how much control member countries will have over the system.
At the same conference, French Finance Minister Pierre Moscovici proposed the creation of a federal budget for the entire region. Moscovici claims such a budget could be used to fight unemployment across the region. In order to finance the budget, he suggested social charges such as sales taxes, carbon emissions taxes and levies on financial transactions.
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