Such a tool, possibly administered by a euro area finance ministry with parliamentary legitimacy and responsibility, would provide essential insurance against asymmetric shocks that induce regional disparities, while, in case of symmetric shocks, it would complement the single monetary policy in its role as a cyclical stabilization tool, in particular when policy rates are at the zero lower bound.
Whilst there appears little appetite at present for fiscal union, there are alternative ways forward as proposed by both policy makers and academics alike.