The sum of national budget balances should lead to an appropriate fiscal stance at the level of the euro area as a whole. While effectively steering the euro area’s fiscal stance will be challenging as long as there is no central fiscal capacity, coordinating national fiscal policies is key to avoiding pro-cyclical fiscal policies and facilitating the smooth functioning of EMU.
When defining the role of the EFB, we have to acknowledge that there may be a trade-off between the breadth of its mandate and the effectiveness of its actions. This should be taken into account when thinking about the allocation of tasks between the EFB and national fiscal councils.