Eurozone: not every compromise is worth taking
On the occasion of the 55th anniversary of the signing of the Franco-German Treaty of Friendship of 1963 (the Élysée Treaty), Emmanuel Macron and Angela Merkel declared, "Our ambition is to define shared positions on all major European issues." They have set themselves a target of reaching a shared position on reform of the eurozone sometime between March and June, in response to proposals put forward by the European Commission in December. Renewed talks between the CDU and the SPD have revived the possibility of a compromise. Merkel now appears to subscribe to the view that a reasonable balance must be found between the need to reduce risk and the need to share it; otherwise, the eurozone will not be able to experience stronger, more consistent growth, and financial stability will not be assured. If markets have currently lowered their guard, what will happen when they tip back into risk aversion and adopt excessively cautious behaviours? The European Central Bank, part of whose role is to guarantee financial stability, has warned about the limits on its intervention, as laid down in its institutional mandate.