In this regard, the euro area faces its own “impossible trinity”: countries do not want to exert peer pressure; the Commission prefers to mediate than to police; and the IMF is only an occasional player in EU affairs. As the euro area has to have a way of both monitoring policies and ensuring their compatibility with monetary union, one of these has to give.
This applies not only to fiscal policies but also to other policies which can cause imbalances within the area. In my view, the change has to come via the Commission, in particular by clarifying its institutional function and improving its independence.