German Chancellor Angela Merkel. Picture: REUTERS
German Chancellor Angela Merkel. Picture: REUTERS

Transforming the eurozone’s bailout fund into a European Monetary Fund is a necessary step and one that could be among the next moves enacted as its members seek to strengthen the currency bloc, Slovak finance minister Peter Kazimír said in an interview.

His comments come as EU finance ministers, meeting in Tallinn, Estonia, seek to capitalise on a favourable shift in the political winds to make headway on uniting the bloc. German Chancellor Angela Merkel also renewed support for exploring the possibility of creating an EU monetary fund while meeting with French Prime Minister Édouard Philippe in Berlin on Friday.

"There is a broad agreement on many issues, for instance the transformation of the European Stability Mechanism (ESM) into a new entity with new tasks is a must," Kazimír said. "It is the primary candidate for a change."

Finance chiefs at the two-day gathering will discuss different ways to further integrate the remaining 27 members of the region after the UK’s departure in an effort to both bolster the economy and to better shield the region from future financial turmoil. The talks come after European Commission president Jean-Claude Juncker laid out his vision for the future of the EU and as some of the region’s senior figures, including France’s newly elected President Emmanuel Macron, call for reform.

"We will have to think about strengthening the ESM in the direction of a European Monetary Fund," Merkel said to reporters after the Berlin meeting. "I also think that our c-operation will become much more consistent, which is why I haven’t opposed a European finance minister."

Merkel added that any proposals would have to be attended by sufficient substance but that she was optimistic that, together with the French government, they could find solutions.

"There is a unique opportunity to go forward with the integration of the eurozone," French finance minister Bruno Le Maire told reporters on his way into the Tallinn meeting. Citing stronger economic conditions in Europe, Macron’s victory and the possibility of a fourth term for Merkel, Le Maire said in October, they will have "the possibility of pushing integration".

Still, while many of the ministers echoed his calls for taking advantage of the political situation to move ahead with reforms, some called for caution on how these will affect the EU more broadly.

"The monetary union is the core of a united Europe but at the same time we have the internal market for all 27," German finance minister Wolfgang Schäuble said. "That’s why it was important for us in past years that the European Monetary Union doesn’t split European unity."

The finance ministers will also discuss ways to develop the economic and monetary union, as well as technological innovation in the capital markets and how it affects banking stability.

"The timing is right, the window of opportunity won’t be open for long," Kazimír said. "After a long period, political cycles of the eurozone’s main players have synchronised."

Bloomberg

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