We must strengthen economic governance mechanisms in the euro area to minimize the risk of additional crises in government finances in the future. The “Euro Plus” pact signed last spring was a step in the right direction.
The signatories – all euro area countries and some other EU countries – committed themselves to several important reforms, such as to implement the EU’s budget guidelines to their national legislation. These nationally implemented norms could help “internalize” the fiscal discipline in each country and render the matter less of an issue of EU policing of the countries’ current fiscal actions.