Such a tool would provide essential insurance to asymmetric shocks, while, in case of symmetric shocks, it would complement the single monetary policy, in particular, when the policy rates are at the zero lower bound. Whilst there appears little appetite at present for full fiscal union, there are alternative ways to go ahead as proposed both by policy makers and academics.
For example, building on the European Fund for Strategic Investments (Juncker’s Plan) and as proposed in the Five President’s Report, a common pool of EU funds for financing EU wide investment projects could provide the impetus for closer integration in the future. These EU funds could possibly come from Eurobonds issued by the ESM.