Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble both want to upgrade the grossly unaccountable Luxembourg-based European Stability Mechanism (ESM) into an IMF-style rescue fund that will,
EU Monetary Commissioner (and former French finance minister) Pierre Moscovici is against it, for a simple reason:
This is not the first time the idea of a European Monetary Fund has been explored.
Ever since the Eurozone's sovereign debt crisis threatened to rip Europe's fragile union apart, rumors have periodically surfaced about the possible creation of a fund capable of taking over the IMF's role as a major source of emergency funding.
In 2010 The Economist magazine organized a roundtable debate on the issue, with Daniel Gros, of the Centre for European Policy Studies and Thomas Mayer, then chief economist of Deutsche Bank, both singing its praises:
Creating a European Monetary Fund would also be an important statement of intent.
If Europe's core countries are truly set on taking the EU project to a whole new level, such as by pursuing the creation of an EU army, an EU border force (with full powers), fiscal union and ultimately political union, some form of burden sharing will ultimately be necessary.
The establishment of a fully operational EMF could be an important move in that direction.
There's an air of furtive desperation about the proceedings.
The Eurozone is clearly closer to the edge today than it's been since 2011, when, to keep the project alive, European authorities toppled the elected governments of two Eurozone members, Italy and Greece.
Those two countries are now in direr straits than they were back then.
If it's to remain in the Eurozone at all (an "if" that grows bigger by the day), Greece will soon need a fresh round of bailout funds. But the IMF continues to insist on some form of debt forgiveness as a prerequisite for a fourth bailout - something Schäuble said won't happen.
If the EU launches its own fund of funds, it should help to dispel any market jitters resulting from an IMF retreat from the Greek bailout.
Then there's Italy, whose blossoming banking crisis, unless fully addressed soon, could bring the whole European experiment crashing down. The country's government has already pledged to spend €20 billion of public funds on bailing out Monte dei Paschi di Siena and a number of mid-size banks, in direct contravention of EU law.
And it's likely to need a lot more than that...
That money will probably end up coming from the European Stability Mechanism (ESM), an institution that was founded on September 27, 2012, as a permanent facility to provide bailouts to countries that are in distress, and whose powers Merkel and Schauble now want to significantly beef up.
The ESM has already disbursed €136 billion of taxpayer funds in loans to Greece, Ireland and Portugal.
It currently has an authorized capital limit of €700 billion, though that can be expanded at any time by the Board of Governors. Individual Eurozone member states are "irrevocably and unconditionally" required to cough up the funds.
Because it is an international organization (located in Luxembourg) and not formally classed as an EU institution or agency, the ESM does not have to adhere to rules or restrictions applicable to EU institutions and is not encumbered by any form of democratic accountability.
Article 32 of its foundation treaty, signed by the governments of Eurozone nations, states that,
According to Article 35 of the same treaty, the,
So gaping is the institution's lack of accountability that it has even drawn the scorn of Transparency International (TI), which published the initial findings of a scathing report this week that describes the ESM's democratic control as "patchy" and calls for Brussels to bring it under EU treaties so that,
That is unlikely to happen.
Germany would much rather have a democratically unaccountable but efficient institution, made in the Bundesbank's image, tamping down on deficit spending by Eurozone economies, as the European Commission has already shown itself wholly incapable of putting fiduciary concerns before short-term political ones.
A fully operational European Monetary Fund would deal a further blow to the fading remnants of national sovereignty in Europe.
This time, the ECB is already doing "whatever it takes."