Rules, oversight 'key' to eurozone survival

European countries are not ready for proposals for a political union. Economist Wim Kösters argues in an interview with DW that the decisive question at present is whether shared rules for the currency union can be held to.

DW: Many have criticized the lack of a political union to back up the euro. For months, people have worked on a concept that would fix this problem retroactively. Ideas have ranged from a joint finance minister for the whole currency union all the way to a shared eurozone budget. None of that came up at the EU summit in mid-December. Has the concept of a political union failed?

Wim Kösters: "It's very hard to agree to a political union when important rules have been broken in the past. Those rules, like the no-bailout clause or the stability and growth pact, formed the basis of a rudimentary political union. That showed that people didn't want a constitution at all for the EU. As such, it's hard to agree to a political union in Europe now. It doesn't have the majority's support. So for now, you have to see it as a failed idea."

And a European finance minister - is that a solution to the crisis? I don't think so. The first question is what this minister is supposed to be doing. Is he supposed to operate according to strict regulations, or should he decide from case to case, as France would like to see. Until we've reached agreement on these issues, it's of no use to introduce such an institution.  However, EU finance ministers had agreed to oversight for Europe's banks ahead of the summit. Will that help the euro zone avoid future crises?

"Basically, I think so. If we get a European banking union that entails first and foremost shared oversight over banks, then we avoid the errors that result when some countries are too lax in supervising banks."

Read more: Rules, oversight 'key' to eurozone survival | Europe | DW.DE | 27.12.2012