Progress Towards Implementing Eu Fiscal Union

The lack of a common EU fiscal policy is a vulnerability in the context of a new financial crisis. At present, Member States manage their fiscal policy at national level. However, the existence of a unitary fiscal system, following the model of the monetary union or the banking union, would have beneficial effects on Member States, providing them with a higher degree of protection against possible financial crises. During the implementation of the Economic and Monetary Union, a set of common fiscal rules was established for all EU countries. In order to complete the current fiscal union several measures are needed: a mechanism of risk sharing at the EMU level, tougher rules and market discipline to discourage moral hazard, and the coordination of national fiscal policies. Several proposals have been made regarding the implementation of this common fiscal mechanism: the EU budget, the European Investment Stability Function or a European Fiscal Authority.