EU ministers to mull "rainy day" fund to weather economic shocks

EU finance ministers are due later this week to discuss whether to set up a controversial "rainy day" fund to help eurozone members weather economic shocks, according to a paper prepared for informal talks in Bratislava, seen Wednesday by dpa.

The 19-member currency area has taken several steps to strengthen its economy following the global financial crisis triggered in 2008, notably by embarking on a banking union.

However, member states such as Germany have resisted any moves - such as a proposed eurozone deposit insurance scheme - that could lead to stronger eurozone members sharing the economic burdens of weaker countries in the currency bloc.

Slovakia, which holds the rotating EU presidency, will ask finance ministers to consider the "highly sensitive" question of creating fiscal mechanisms to help absorb economic shocks, according to the paper prepared for two-day talks in its capital starting Friday.

The options outlined in the document include a "simple stabilization fund which would provide supporting payments to member states experiencing 'rainy days'."

It could be financed by annual payments or by contributions paid during good times, with the option of helping individual countries experiencing domestic shocks or of activating the fund only when the bloc as a whole faces an economic downturn.

Funds could be paid out to help tackle high unemployment or to boost investment, among other things, according to the paper.

It stresses the importance of clear rules to "reduce the room for double standards and politicization" of such a fund, as well as safeguards to avoid creating a "disguised form of permanent transfers" from one set of countries to another.

Last update: Wed, 07/09/2016 - 18:24

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