MNI: EMU Leaders To Debate Fiscal Capacity, Good Policy Making

--Draft Discussion Paper Stresses "Limited Degree" Of Agreement Seen

By Jean Comte

     BRUSSELS (MNI) - Eurozone heads of state will meet in Brussels Friday for a

summit dedicated to the deepening of the Economic and Monetary Union, with two

issues set to dominate the talks, MNI has learned.

     According to a draft discussion paper obtained by MNI, the two issues set

to dominate the discussion: the possible set-up of a eurozone fiscal capacity

and the best way the EU can help to promote national structural reforms.

     Discussions on these issues have shown only a 'limited degree of consensus'

so far, the document stresses and expresses hopes that Friday's debate will give

clarity on a way forward.

     The idea of a euro-area dedicated fiscal capacity has been pushed for a

long time by the EU Commission, but it has failed to convince some member

states. Questions remains regarding its practical set-up (inside or separate

from the EU budget) and its goal (investment support or structural reform).

     --NATIONAL REGULATORS

     Good policy making and structural reform has been long-discussed by the

Eurogroup, but responsibility mostly rests in the hands of national regulators

-- leaving only good practice and topical exchanges of view to take place at the

EU level. 

     Some countries, including Germany, are pushing to have a stronger overview

at EU level, with suggestions that a future euro area fiscal capacity is used as

a tool or an incentive to conduct them.

     Both issues are thus 'interlinked', concludes the draft paper.

     One EU source told MNI that Friday's discussion is not supposed to be

conclusive, but only to give 'guidance' to finance ministers - which will then

start formal discussions on these issues at the Eurogroup meetings.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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